In finance, one example of a derivative is a financial asset whose value is determined (derived) from a bundle of various assets, such as mortgages. Suppose a randomly selected mortgage in a certain bundle has a probability of 0.08 of default. (a) What is the probability that a randomly selected mortgage will not default? (b) What is the probability that four randomly selected mortgages will not default assuming the likelihood any one mortgage being paid off is independent of the others? Note: A derivative might be an investment that only pays when all four mortgages do not default. (c) What is the probability that the derivative from part (b) becomes worthless? That is, at least one of the mortgages defaults. (a) The probability is (Type an integer or a decimal. Do not round.) (b) The probability is (Round to four decimal places as needed.) (c) The probability is (Round to four decimal places as needed.)

Q: Suppose a life insurance company sells a $270,000 one-year term life insurance policy to a…

A: Formula for expected value :  Expected value= ∑xP(x)

Q: Suppose a company charges an annual premium of $475 for a fire insurance policy. In case of a fire…

A: We make a probability distribution for claims Claim (xi) 0 100000 Probability (pi)…

Q: There is a bank office with a single operator. The service time of each customer is exponentially…

A:

Q: A park ranger is searching for bears in a region of the park where on average there are 5 bears per…

A: Let X be the random variable which takes the values as the number of bears the park ranger found in…

Q: Suppose the time it takes Alex to do this exam is exponentially distributed with parameter 3 per…

A: Introduction to Exponential distribution: A random variable X is said to have a exponential…

Q: From past experience, it was found out that in a certain factory, there is an average of two…

A: Let ,X=no.of accidents per monthX~poisson (λ=2)P(X=x)=e-λ λxx! ; x≥0

Q: Assume the petal length of a population of plants of species A is normally distributed with a mean…

A:

Q: In finance, one example of a derivative is a financial asset whose value is determined (derived)…

A:

Q: A manager of a fast food restaurant observes that, an average of 9 customers are served by a waiter…

A: Let, X:  Service time for waiter Given X~exp(α) Where,   α= 9 customers/hour

Q: If the time T to failure of a component is exponentially distributed with para- meter 1 and if n…

A:

Q: The observed annual maximum runoff, X, in the Kızılırmak River has been modelled by a normal…

A: Thanks for giving opportunity to serve for bartleby students, Hey, There ! Thank you for posting…

Q: During one twelve-week period, a particular mutual fund outperformed the S&P 500 index 39 out of 60…

A: It is given that the mutual fund outperformed the S&P 500 index is 39 out of 60 days.

Q: Find the moments of Cauchy distribution.

A:

Q: The probability that a 22-year-old female in the U.S. will die within one year is approximately…

A: Given that the company will pay  $30,000 life insurance with a probability of 0.00044.   So the…

Q: The time between arrivals of vehicles at particular intersection follows an exponential probability…

A: Given: Time between arrivals of vehicles at particular intersection follows an exponential…

Q: The probability that a corporation made profits in 2019 is 0.65 and the probability that a…

A: given data  event A : corporation made profits in 2019 event B: corporation made charitable…

Q: 2. At the bank teller there are two agents. At agent 1, the time to complete service in minutes…

A: Given that the time to complete service in minutes for two bank teller agents distributed as Agent…

Q: In finance, one example of a derivative is a financial asset whose value is determined (derived)…

A:

Q: A company estimates that 0.85% of their products will fail after the original warranty period but…

A:

Q: he probability of the mango chosen at random being infested by worms is Find the xpectation and…

A:

Q: The joint probability function associated with data obtained in a study of auto-mobile accidents in…

A: Before we solve (v) let us find the value of m.…

Q: It is assumed that the X chance variable shows a lognormal distribution with parameters μ = 0 and σ…

A: Given Data: X~ Log Normal (0, 22)   We know that Log (x)~ Normal (0, 22)

Q: In a certain communications system, there is an average of 1 transmission error per 10 seconds.…

A: It is given that there are 1 transmission error per 10 seconds. Therefore, there are 3 transmission…

Q: Oliver knows that a virus is relatively virulent and estimates that 15% of the population has the…

A: Let the testing kit of Oliver accurately identifies the disease with a probability of p. Probability…

Q: The distribution of distances travelled in kilometres by patrons of a supermarket is known to follow…

A: Let X be the continuous exponential random variable with λ = 0.6 Then,  We will find the probability…

Q: Suppose a life insurance company sells a $260,000 one-year term life insurance policy to a…

A: Given data: The amount which is required to purchase the policy = $200. The probability that the…

Q: A portfolio manager has positions that include a £100,000 investment in A Corp and a £75,000…

A: Since you have posted a question with multiple subparts, we will solve first three subparts for you.…

Q: Show that the Cauchy probability distribution does not have the first moment that is, E(X) does not…

A: The objective is to show the first moment does not exist for cauchy distribution

Q: Suppose that the length of long distance phone calls, measured in minutes, is known to have an…

A:

Q: In the US, the systolic blood pressure of a randomly selected patient has unknown distribution with…

A:

Q: Derive the moment generating function (MGF) of a random variable ?.

A: Given that      We have to derive the moment generating function of Y

Q: In finance, one example of a derivative is a financial asset whose value is determined (derived)…

A: Given data suppose a randomly selected mortgage in a certain bundle has a probability of 0.05 of…

Q: (i) If the selected smartphone is sold below RM2500, find the probability that the smartphone is…

A: Here define events and draw tree diagram  Smartphone sold is from China = C Smartphone sold is from…

Q: A doorman at a hotel is trying to get three taxi-cabs for three couples. The arrival of empty cabs…

A:

Q: After an automobile is 1 year old, its rate of depreciation at any time is proportional to its value…

A: Given:  After an automobile is 1 year old, its rate of depreciation at any time is proportional to…

Q: An investigative bureau uses a laboratory method to match the lead in a bullet found at a crime…

A: Given that N=1809

Q: For 10 percent of the products in a category, a firm fails to satisfy all demand during themonth.…

A: Given: For 10 percent of the products in a category, a firm fails to satisfy all demand during…

Q: In finance, one example of a derivative is a financial asset whose value is determined (derived)…

A: Given information- We have given that a financial asset whose value is determined (derived) from a…

Q: If X is exponentially distributed, prove that the probability that X exceed its expected value is…

A:

Q: Suppose that the lifetime of a soft white light bulb follows an exponential distribution with…

A: Let us define X1 as the lifetime of a soft white light bulb follows exponential distribution with…

Q: In finance, one example of a derivative is a financial asset whose value is determined (derived)…

A: We are given that the probability of a mortgage to be default is 0.06 (say p)

Q: Suppose a life insurance company sells a $280,000 one-year term life insurance policy to a…

A:

Q: In a village power cuts occur randomly at a rate of 3 per year. Use a suitable approximation to find…

A:

Q: Each of the 6 tubes of a radio set has a life length (in years) which may be considered as a RV that…

A:

Q: In finance, one example of a derivative is a financial asset whose value is determined (derived)…

A: Disclaimer : “Since you have posted a question with multiple sub-parts, we will solve first three…

Types of Bias

Statistics is the study of data collection, organization, analysis, interpretation, and presentation. Statistical bias is a characteristic of a statistical technique or its findings in which the expected value deviates from the actual root quantitative parameter being estimated. According to the actual definition of bias, it refers to the tendency of a statistic to overestimate or underestimate a parameter.