Chapter 3 – Problem 18 a) Let the probability of state 1 (the high performance state) be P(H) = 0.5 Let the probability of state 2 (the low performance state) be P(L) = 0.5 We assume that the amount of utility or satisfaction Ajay derives from a payoff is equal to the square root of the amount of the payoff. So‚ we get Ui(a) = √x‚ x≥0 Where x is the amount of the payoff The decision theory tells us that the act with the highest expected utility should be chosen. We denote
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Formula booklet 5045 1 Contents Prior learning 2 Topics 3 Topic 1—Algebra 3 Topic 2—Functions and equations 4 Topic 3—Circular functions and trigonometry 4 Topic 4—Vectors 5 Topic 5—Statistics and probability 5 Topic 6—Calculus 6 Mathematics SL formula booklet 1 Formulae Prior learning Area of a parallelogram Area of a triangle Area of a trapezium A b h A 1 (b h) 2 A 1 ( a b) h 2 Area of a circle A
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13. Variance and Standard Deviation (expected). Using the data from problem 13‚ calculate the variance and standard deviation of the three investments‚ stock‚ corporate bond‚ and government bond. If the estimates for both the probabilities of the economy and the returns in each state of the economy are correct‚ which investment would you choose considering both risk and return? Why? ANSWER Variance of Stock = 0.10 x (0.25 – 0.033)2 + 0.15 x (0.12 – 0.033)2 + 0.50 x (0.04 – 0.033)2 + 0
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STAT 2606 Assignment # 3 Solutions to lab Part(Numerical answers are random and therefore may slightly vary) Fall 2013 Last Name ——————————————- ‚ First ———————- Student # ———————— Lab section (A1 ‚ . . . A4 ‚ B1 . . . ‚ B4 ‚ C1 · · · C4 ‚ or D1 ‚ · · · ‚ D4 ) ———————– Due in class: Sec. A‚ B: Tue. Nov. 12‚ Sec. C: Wed. Nov. 13‚ Sec. D: Mon. Nov. 11. Total mark=100. Marks for each question are given in [ ] Part I. Lab questions. Use only blanks left to answer lab questions. Provide
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interest rate of 3.54%‚ and a constant inflation rate‚ bond A will be the most sensitive to the change in interest rates. Part 2: 1. Bond A has the highest expected return of 11.48%. This is due to the high yields that bond A has for each probability‚ which in turn gives a higher expected return. 2. The riskiest bond would be bond A‚ due to the expected return of 11.48% and the standard deviation of 8.06% being the highest of the three. The higher the expected return and standard deviation
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value of the number of movements it is to make in an hour would be the relevant variable‚ the actual values can be sampled‚ the information can then be used for the mean‚ the standard deviation and sample size will determine the probability of differences. If the probability is higher than the threshold that is set then action will need to be taken. References McClave‚ J. T.‚ Benson‚ P. G.‚ & Sincich‚ T. (2011). Statistics for business and economics (11th ed.). Boston‚ MA: Prentice Hall. What
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Assignment for Week -2 Chapter 5 (5 - 9) Bond Valuation and Interest Rate Risk Bond L Bond S INS = $100 INS = $100 M = $1‚000 M = $1‚000 N = 15 Years N = 1 Year a) 1) rd = 5% VBL = INT/ (1 + rd)t + M/ (1 + rd)N =INT [1/rd – 1/ rd(1 + rd)N ] + M/ (1 + rd)N =$100 [1/0.05 – 1/ 0.05(1 + 0.05)15] + $1‚000/ (1 + 0.05)15 =$1040 + $480.77 = $1518.98
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population size caused by subtractions or additions to the population does not significantly affect the Distribution of Arrivals system probabilities McDonalds Waiting Line’s population is large enough in relation to the service system so that the population size caused by subtractions or additions to the population does not significantly affect the system probabilities Observation I Observation Time 12.30 – 1.30 PM : Lunch Time (18/03/2015) 5.00 – 6.00 PM : Afternoon / Off Work Time (19/03/2015)
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Five-Step Approach to Unstructured Problems 1. Succinct Statement of the Financial Reporting Issue(s) Provide a brief statement of the accounting issue that includes the characteristics of the transaction that introduce uncertainty about how to record it. How should an expenditure‚ in this instance to purchase a lottery ticket‚ which has a risk of providing no future cash flows be reported? 2. Brief Summary of the Economic Purpose of the Transaction State the reason corporate management
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S1 Notes Monday 16 th January 2012 Mr Aroui Statistical experiment: A test adopted for collecting data to provide evidence for or against a hypothesis. Event: A sub-set of possible outcomes of an experiment. Sample space: A list of all possible outcomes of an experiment. Discrete data: Discrete data can only take certain values in any given range. Number of cars in a household is an example of discrete data. The values do not have to be whole numbers (e.g. shoe size is discrete)
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