Elementary Statistics (Text Only)
2nd Edition
ISBN: 9780077836351
Author: Author
Publisher: McGraw Hill
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 9.4, Problem 31E
To determine
To justify why hypothesis test should not use for given claim.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Question 2. An American option on a stock has payoff given by F = f(St) when it is exercised
at time t. We know that the function f is convex. A person claims that because of convexity,
it is optimal to exercise at expiration T. Do you agree with them?
Question 4. We consider a CRR model with So == 5 and up and down factors u = 1.03 and
d = 0.96. We consider the interest rate r = 4% (over one period). Is this a suitable CRR
model? (Explain your answer.)
Question 3. We want to price a put option with strike price K and expiration T. Two financial
advisors estimate the parameters with two different statistical methods: they obtain the same
return rate μ, the same volatility σ, but the first advisor has interest r₁ and the second advisor
has interest rate r2 (r1>r2). They both use a CRR model with the same number of periods to
price the option. Which advisor will get the larger price? (Explain your answer.)
Chapter 9 Solutions
Elementary Statistics (Text Only)
Ch. 9.1 - In Exercises 7 and 8, fill in each blank with the...Ch. 9.1 - In Exercises 7 and 8, fill in each blank with the...Ch. 9.1 - In Exercises 9-12, determine whether the statement...Ch. 9.1 - In Exercises 9-12, determine whether the statement...Ch. 9.1 - In Exercises 9-12, determine whether the statement...Ch. 9.1 - In Exercises 9-12, determine whether the statement...Ch. 9.1 - In Exercises 13-16, determine whether the...Ch. 9.1 - In Exercises 13-16, determine whether the...Ch. 9.1 - In Exercises 13-16, determine whether the...Ch. 9.1 - In Exercises 13-16, determine whether the...
Ch. 9.1 - In Exercises 17–20, determine whether the...Ch. 9.1 - In Exercises 17-20, determine whether the outcome...Ch. 9.1 - In Exercises 17–20, determine whether the...Ch. 9.1 - In Exercises 17–20, determine whether the...Ch. 9.1 - Fertilizer: A new type of fertilizer is being...Ch. 9.1 - Big fish: A sample of loo flounder of a certain...Ch. 9.1 - Check, please: A restaurant owner claims that the...Ch. 9.1 - Coffee: The mean caffeine content per cup of...Ch. 9.1 - Big dogs: A veterinarian claims that the mean...Ch. 9.1 - Business trips A sales manager believes that the...Ch. 9.1 - Type I error: A company that manufactures steel...Ch. 9.1 - Type I error: Washers used in a certain...Ch. 9.1 - Scales: It is desired to check the calibration of...Ch. 9.1 - IQ: Scores on a certain IQ test are known to have...Ch. 9.2 - In Exercises 23–28, fill in each blank with the...Ch. 9.2 - In Exercises 23-28, fill in each blank with the...Ch. 9.2 - Prob. 25ECh. 9.2 - In Exercises 23-28, fill in each blank with the...Ch. 9.2 - Prob. 27ECh. 9.2 - Prob. 28ECh. 9.2 - In Exercises 29-34, determine whether the...Ch. 9.2 - In Exercises 29-34, determine whether the...Ch. 9.2 - Prob. 31ECh. 9.2 - Prob. 32ECh. 9.2 - Prob. 33ECh. 9.2 - Prob. 34ECh. 9.2 - A test is made of H0:=50 versus H1:50. A sample of...Ch. 9.2 - A test is made of H0:=14 versus H1:14. A sample of...Ch. 9.2 - A test is made of H0:=130 versus H1:130. A sample...Ch. 9.2 - A test is made of H0:=5 versus H1:5. A sample of...Ch. 9.2 - A test of the hypothesis H0:=65 versus H1:65 was...Ch. 9.2 - A test of the hypothesis H0:=150 versus H1:150 was...Ch. 9.2 - True or false: If P=0.02, then The result is...Ch. 9.2 - True or false: If P=0.08, then The result is...Ch. 9.2 - A test of H0:=17 versus H1:17 is performed using a...Ch. 9.2 - A test of H0:=50 versus H1:50 is performed using a...Ch. 9.2 - A test of H0:=0 versus H1:0 is performed using a...Ch. 9.2 - Prob. 46ECh. 9.2 - If H0 is rejected at the =0.05 level, which of the...Ch. 9.2 - Prob. 48ECh. 9.2 - If P=0.03, which of the following is the best...Ch. 9.2 - Prob. 50ECh. 9.2 - Prob. 51ECh. 9.2 - Are you smarter than a second grader? A random...Ch. 9.2 - Height and age: Are older men shorter than younger...Ch. 9.2 - Calibrating a scale: Making sure that the scales...Ch. 9.2 - Prob. 55ECh. 9.2 - Prob. 56ECh. 9.2 - Prob. 57ECh. 9.2 - Prob. 58ECh. 9.2 - What are you drinking? Environmental Protection...Ch. 9.2 - Prob. 60ECh. 9.2 - Interpret calculator display: The age in years was...Ch. 9.2 - Interpret calculator display: The number of...Ch. 9.2 - Prob. 63ECh. 9.2 - Prob. 64ECh. 9.2 - Prob. 65ECh. 9.2 - Statistical or practical significance: A new...Ch. 9.2 - Test scores: A math teacher has developed a new...Ch. 9.2 - Prob. 68ECh. 9.2 - Prob. 69ECh. 9.2 - Prob. 70ECh. 9.2 - Prob. 71ECh. 9.2 - Large samples and practical significance: A sample...Ch. 9.3 - In Exercises 7 and 8, fill in each blank with the...Ch. 9.3 - Prob. 8ECh. 9.3 - Prob. 9ECh. 9.3 - Prob. 10ECh. 9.3 - Find the P-value for the following values of the...Ch. 9.3 - Find the P-value for the following values of the...Ch. 9.3 - Find the critical value or values for the...Ch. 9.3 - Find the critical value or values for the...Ch. 9.3 - Is there a doctor in the house? The market...Ch. 9.3 - College tuition: The mean annual tuition and fees...Ch. 9.3 - Big babies: The National Health Statistics Reports...Ch. 9.3 - Good credit: The Fair Isaac Corporation (FICO)...Ch. 9.3 - Commuting to work: The American Community Survey...Ch. 9.3 - Watching TV: The General Social Survey asked a...Ch. 9.3 - Prob. 21ECh. 9.3 - How much is in that can? A machine that fills...Ch. 9.3 - Prob. 23ECh. 9.3 - Prob. 24ECh. 9.3 - Keep cool: Following are prices, in dollars, of a...Ch. 9.3 - Prob. 26ECh. 9.3 - Prob. 27ECh. 9.3 - Prob. 28ECh. 9.3 - Interpret calculator display: A sample of adults...Ch. 9.3 - Prob. 30ECh. 9.3 - Prob. 31ECh. 9.3 - Prob. 32ECh. 9.3 - Does this diet work? In a study of the...Ch. 9.3 - Prob. 34ECh. 9.3 - Prob. 35ECh. 9.3 - Prob. 36ECh. 9.3 - Larger or smaller P-value? In a study of sleeping...Ch. 9.3 - Larger or smaller P-value? Juan and Mary want to...Ch. 9.3 - Interpret a P-value: A real estate agent believes...Ch. 9.3 - Interpret a P-value: The manufacturer of a...Ch. 9.3 - Using z instead of t: When the sample size is...Ch. 9.4 - In Exercises 5 and 6, fill in each blank with the...Ch. 9.4 - In Exercises 5 and 6, fill in each blank with the...Ch. 9.4 - Prob. 7ECh. 9.4 - Prob. 8ECh. 9.4 - In a simple random sample of size 80, there were...Ch. 9.4 - Prob. 10ECh. 9.4 - In a simple random sample of size 75, there were...Ch. 9.4 - In a simple random sample of size 150, there were...Ch. 9.4 - Prob. 13ECh. 9.4 - Prob. 14ECh. 9.4 - Prob. 15ECh. 9.4 - Prob. 16ECh. 9.4 - Quit smoking: In a survey of 444 HIV-positive...Ch. 9.4 - Prob. 18ECh. 9.4 - Prob. 19ECh. 9.4 - Curing diabetes: Vertical banded gastroplasty is a...Ch. 9.4 - Tweet tweet: An article in Forbes magazine...Ch. 9.4 - Prob. 22ECh. 9.4 - Choosing a doctor: Which do patients value more...Ch. 9.4 - Prob. 24ECh. 9.4 - Interpret calculator display: In a recent poll,...Ch. 9.4 - Prob. 26ECh. 9.4 - Prob. 27ECh. 9.4 - Prob. 28ECh. 9.4 - Prob. 29ECh. 9.4 - Who will you vote for? A simple random sample of...Ch. 9.4 - Prob. 31ECh. 9.4 - Dont perform a test: Over the past 100 days, the...Ch. 9.4 - Exact test: When np010 or n(1p0)10, we cannot use...Ch. 9.5 - In Exercises 5 and 6, fill in each blank with the...Ch. 9.5 - Prob. 6ECh. 9.5 - Prob. 7ECh. 9.5 - Prob. 8ECh. 9.5 - Prob. 9ECh. 9.5 - Prob. 10ECh. 9.5 - Prob. 11ECh. 9.5 - Prob. 12ECh. 9.5 - A random sample of size 25 from a normal...Ch. 9.5 - Prob. 14ECh. 9.5 - Babies: A sample of 25 one-year-old girls had a...Ch. 9.5 - Watching TV: The General Social Survey asked a...Ch. 9.5 - IQ scores: Scores on an IQ test are normally...Ch. 9.5 - SAT scores: Scores on the math SAT are normally...Ch. 9.5 - How much is in that can? A machine that fills...Ch. 9.5 - Prob. 20ECh. 9.5 - Prob. 21ECh. 9.5 - Prob. 22ECh. 9.5 - Prob. 23ECh. 9.6 - In Exercises 5–12, slate which type of parameter...Ch. 9.6 - Prob. 6ECh. 9.6 - Prob. 7ECh. 9.6 - Prob. 8ECh. 9.6 - Prob. 9ECh. 9.6 - Prob. 10ECh. 9.6 - Prob. 11ECh. 9.6 - Prob. 12ECh. 9.6 - Prob. 13ECh. 9.6 - Prob. 14ECh. 9.6 - Cookies: Following are the weights of 8 boxes of...Ch. 9.6 - Prob. 16ECh. 9.6 - Teacher salaries: A random sample of 50 public...Ch. 9.6 - Prob. 18ECh. 9.6 - Mercury pollution: Mercury is a toxic metal that...Ch. 9.6 - Prob. 20ECh. 9.7 - In Exercises 3-5, fill in each blank with the...Ch. 9.7 - Prob. 4ECh. 9.7 - Prob. 5ECh. 9.7 - In Exercises 6-8, determine whether the statement...Ch. 9.7 - Prob. 7ECh. 9.7 - Prob. 8ECh. 9.7 - Prob. 9ECh. 9.7 - A test has power 0.80 when 1=3.5. True or false:...Ch. 9.7 - Prob. 11ECh. 9.7 - Prob. 12ECh. 9.7 - Prob. 13ECh. 9.7 - Watch sour cholesterol: An article in the...Ch. 9.7 - Prob. 15ECh. 9.7 - Coffee beans: Refer to Exercise 12. A test of the...Ch. 9.7 - Prob. 17ECh. 9.7 - Prob. 18ECh. 9.7 - Prob. 19ECh. 9 - Fill in the blank: A test of the hypotheses H0:=65...Ch. 9 - A hypothesis test results in a P-value of 0.008....Ch. 9 - Prob. 3CQCh. 9 - Prob. 4CQCh. 9 - Prob. 5CQCh. 9 - Prob. 6CQCh. 9 - Prob. 7CQCh. 9 - In a random sample of 500 people who took their...Ch. 9 - Prob. 9CQCh. 9 - Prob. 10CQCh. 9 - Prob. 11CQCh. 9 - In a test of H0:=5 versus H1:5, the value of the...Ch. 9 - True or false: We can perform a test for a...Ch. 9 - Prob. 14CQCh. 9 - Prob. 15CQCh. 9 - Prob. 1RECh. 9 - Prob. 2RECh. 9 - Prob. 3RECh. 9 - Prob. 4RECh. 9 - Prob. 5RECh. 9 - Prob. 6RECh. 9 - Prob. 7RECh. 9 - Job satisfaction: The General Social Survey...Ch. 9 - Prob. 9RECh. 9 - Prob. 10RECh. 9 - Prob. 11RECh. 9 - Prob. 12RECh. 9 - Prob. 13RECh. 9 - Prob. 14RECh. 9 - Prob. 15RECh. 9 - Prob. 1WAICh. 9 - Prob. 2WAICh. 9 - Prob. 3WAICh. 9 - Prob. 4WAICh. 9 - Prob. 5WAICh. 9 - Prob. 6WAICh. 9 - Prob. 1CSCh. 9 - Prob. 2CSCh. 9 - Prob. 3CSCh. 9 - For some records marked with a * the record...Ch. 9 - Prob. 5CSCh. 9 - Prob. 6CSCh. 9 - Prob. 7CS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.Similar questions
- Question 5. We consider a put option with strike price K and expiration T. This option is priced using a 1-period CRR model. We consider r > 0, and σ > 0 very large. What is the approximate price of the option? In other words, what is the limit of the price of the option as σ∞. (Briefly justify your answer.)arrow_forwardQuestion 6. You collect daily data for the stock of a company Z over the past 4 months (i.e. 80 days) and calculate the log-returns (yk)/(-1. You want to build a CRR model for the evolution of the stock. The expected value and standard deviation of the log-returns are y = 0.06 and Sy 0.1. The money market interest rate is r = 0.04. Determine the risk-neutral probability of the model.arrow_forwardSeveral markets (Japan, Switzerland) introduced negative interest rates on their money market. In this problem, we will consider an annual interest rate r < 0. We consider a stock modeled by an N-period CRR model where each period is 1 year (At = 1) and the up and down factors are u and d. (a) We consider an American put option with strike price K and expiration T. Prove that if <0, the optimal strategy is to wait until expiration T to exercise.arrow_forward
- We consider an N-period CRR model where each period is 1 year (At = 1), the up factor is u = 0.1, the down factor is d = e−0.3 and r = 0. We remind you that in the CRR model, the stock price at time tn is modeled (under P) by Sta = So exp (μtn + σ√AtZn), where (Zn) is a simple symmetric random walk. (a) Find the parameters μ and σ for the CRR model described above. (b) Find P Ste So 55/50 € > 1). StN (c) Find lim P 804-N (d) Determine q. (You can use e- 1 x.) Ste (e) Find Q So (f) Find lim Q 004-N StN Soarrow_forwardIn this problem, we consider a 3-period stock market model with evolution given in Fig. 1 below. Each period corresponds to one year. The interest rate is r = 0%. 16 22 28 12 16 12 8 4 2 time Figure 1: Stock evolution for Problem 1. (a) A colleague notices that in the model above, a movement up-down leads to the same value as a movement down-up. He concludes that the model is a CRR model. Is your colleague correct? (Explain your answer.) (b) We consider a European put with strike price K = 10 and expiration T = 3 years. Find the price of this option at time 0. Provide the replicating portfolio for the first period. (c) In addition to the call above, we also consider a European call with strike price K = 10 and expiration T = 3 years. Which one has the highest price? (It is not necessary to provide the price of the call.) (d) We now assume a yearly interest rate r = 25%. We consider a Bermudan put option with strike price K = 10. It works like a standard put, but you can exercise it…arrow_forwardIn this problem, we consider a 2-period stock market model with evolution given in Fig. 1 below. Each period corresponds to one year (At = 1). The yearly interest rate is r = 1/3 = 33%. This model is a CRR model. 25 15 9 10 6 4 time Figure 1: Stock evolution for Problem 1. (a) Find the values of up and down factors u and d, and the risk-neutral probability q. (b) We consider a European put with strike price K the price of this option at time 0. == 16 and expiration T = 2 years. Find (c) Provide the number of shares of stock that the replicating portfolio contains at each pos- sible position. (d) You find this option available on the market for $2. What do you do? (Short answer.) (e) We consider an American put with strike price K = 16 and expiration T = 2 years. Find the price of this option at time 0 and describe the optimal exercising strategy. (f) We consider an American call with strike price K ○ = 16 and expiration T = 2 years. Find the price of this option at time 0 and describe…arrow_forward
- 2.2, 13.2-13.3) question: 5 point(s) possible ubmit test The accompanying table contains the data for the amounts (in oz) in cans of a certain soda. The cans are labeled to indicate that the contents are 20 oz of soda. Use the sign test and 0.05 significance level to test the claim that cans of this soda are filled so that the median amount is 20 oz. If the median is not 20 oz, are consumers being cheated? Click the icon to view the data. What are the null and alternative hypotheses? OA. Ho: Medi More Info H₁: Medi OC. Ho: Medi H₁: Medi Volume (in ounces) 20.3 20.1 20.4 Find the test stat 20.1 20.5 20.1 20.1 19.9 20.1 Test statistic = 20.2 20.3 20.3 20.1 20.4 20.5 Find the P-value 19.7 20.2 20.4 20.1 20.2 20.2 P-value= (R 19.9 20.1 20.5 20.4 20.1 20.4 Determine the p 20.1 20.3 20.4 20.2 20.3 20.4 Since the P-valu 19.9 20.2 19.9 Print Done 20 oz 20 oz 20 oz 20 oz ce that the consumers are being cheated.arrow_forwardT Teenage obesity (O), and weekly fast-food meals (F), among some selected Mississippi teenagers are: Name Obesity (lbs) # of Fast-foods per week Josh 185 10 Karl 172 8 Terry 168 9 Kamie Andy 204 154 12 6 (a) Compute the variance of Obesity, s²o, and the variance of fast-food meals, s², of this data. [Must show full work]. (b) Compute the Correlation Coefficient between O and F. [Must show full work]. (c) Find the Coefficient of Determination between O and F. [Must show full work]. (d) Obtain the Regression equation of this data. [Must show full work]. (e) Interpret your answers in (b), (c), and (d). (Full explanations required). Edit View Insert Format Tools Tablearrow_forwardThe average miles per gallon for a sample of 40 cars of model SX last year was 32.1, with a population standard deviation of 3.8. A sample of 40 cars from this year’s model SX has an average of 35.2 mpg, with a population standard deviation of 5.4. Find a 99 percent confidence interval for the difference in average mpg for this car brand (this year’s model minus last year’s).Find a 99 percent confidence interval for the difference in average mpg for last year’s model minus this year’s. What does the negative difference mean?arrow_forward
- A special interest group reports a tiny margin of error (plus or minus 0.04 percent) for its online survey based on 50,000 responses. Is the margin of error legitimate? (Assume that the group’s math is correct.)arrow_forwardSuppose that 73 percent of a sample of 1,000 U.S. college students drive a used car as opposed to a new car or no car at all. Find an 80 percent confidence interval for the percentage of all U.S. college students who drive a used car.What sample size would cut this margin of error in half?arrow_forwardYou want to compare the average number of tines on the antlers of male deer in two nearby metro parks. A sample of 30 deer from the first park shows an average of 5 tines with a population standard deviation of 3. A sample of 35 deer from the second park shows an average of 6 tines with a population standard deviation of 3.2. Find a 95 percent confidence interval for the difference in average number of tines for all male deer in the two metro parks (second park minus first park).Do the parks’ deer populations differ in average size of deer antlers?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Glencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw Hill
Holt Mcdougal Larson Pre-algebra: Student Edition...AlgebraISBN:9780547587776Author:HOLT MCDOUGALPublisher:HOLT MCDOUGAL
Big Ideas Math A Bridge To Success Algebra 1: Stu...AlgebraISBN:9781680331141Author:HOUGHTON MIFFLIN HARCOURTPublisher:Houghton Mifflin Harcourt
College Algebra (MindTap Course List)AlgebraISBN:9781305652231Author:R. David Gustafson, Jeff HughesPublisher:Cengage Learning
Algebra & Trigonometry with Analytic GeometryAlgebraISBN:9781133382119Author:SwokowskiPublisher:Cengage
Glencoe Algebra 1, Student Edition, 9780079039897...
Algebra
ISBN:9780079039897
Author:Carter
Publisher:McGraw Hill
Holt Mcdougal Larson Pre-algebra: Student Edition...
Algebra
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Big Ideas Math A Bridge To Success Algebra 1: Stu...
Algebra
ISBN:9781680331141
Author:HOUGHTON MIFFLIN HARCOURT
Publisher:Houghton Mifflin Harcourt
College Algebra (MindTap Course List)
Algebra
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:Cengage Learning
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:9781133382119
Author:Swokowski
Publisher:Cengage
Hypothesis Testing - Solving Problems With Proportions; Author: The Organic Chemistry Tutor;https://www.youtube.com/watch?v=76VruarGn2Q;License: Standard YouTube License, CC-BY
Hypothesis Testing and Confidence Intervals (FRM Part 1 – Book 2 – Chapter 5); Author: Analystprep;https://www.youtube.com/watch?v=vth3yZIUlGQ;License: Standard YouTube License, CC-BY