1. The following probability tree characterizes prospects that may occur after choosing a given alternative.The profit (expressed in thousands of dollars) is presented at the end of the tree.K $30High Demand0.30.7Low DemandHigh Cost0.2{Profit <= 80 K$|& }{20 <= Profit <= 70|& }{Profit >= 30 K$|& }0.8Low CostHigh Cost0.50.5Low Costa. Plot the probability mass function for profitb. Plot the cumulative probability for profit.c. Plot the excess cumulative probability for profit.d. Determine:Sun0.60.4RainSun0.60.4RainSun0.60.4RainSun0.60.4Rain40100110-1002030

Answered: 1. The following probability tree…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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1. ABC inc. stock is currently selling for $30, one year from today the stock price can either increase by 20% or decrease by 15%. The probability of an increase in the stock price is equal to 0.3. The one-year risk-free rate is 5% What is the value of a European put that expires in one year with an exercise price of $24. 2. Graphically, show the value and the profit and loss of the following butterfly position: Long in a call with an exercise price of $30, short in 2 calls with an exercise price of $45, and long in a call with an exercise price of 60. All calls are written on the same stock and have the same maturity. 3. "Early exercise of an American option on a stock that does not pay any dividend is not optimal regardless of whether the option is a Call or a Put". True, False, or Uncertain. Explain.
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What is the probability that the total of two randomly chosen numbers exceeds 3, where the first number is chosen from a uniform distribution between 0 and 2, and the second number is selected from an exponential distribution with a mean of 1?
Recall that Benford's Law claims that numbers chosen from very large data files tend to have "1" as the first nonzero digit disproportionately often. In fact, research has shown that if you randomly draw a number from a very large data file, the probability of getting a number with "1" as the leading digit is about 0.301. Now suppose you are the auditor for a very large corporation. The revenue file contains millions of numbers in a large computer data bank. You draw a random sample of n = 226 numbers from this file and r = 87 have a first nonzero digit of 1. Let p represent the population proportion of all numbers in the computer file that have a leading digit of 1. 1) Test the claim that p is more than 0.301. Use α = 0.10. 2) What is the value of the sample test statistic? (Round your answer to two decimal places.) 3) Find the P-value of the test statistic. (Round your answer to four decimal places.) 4) If p is in fact larger than 0.301, it would seem there are too many numbers in…
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(first part of question is attached) (e) What is the probability that the sample proportion of students of adults living with parents or other relatives is higher than 0.3? (f) What is the probability that the sample proportion of adults living alone is between 0.1 and 0.15?
Benford's Law claims that numbers chosen from very large data files tend to have "1" as the first nonzero digit disproportionately often. In fact, research has shown that if you randomly draw a number from a very large data file, the probability of getting a number with "1" as the leading digit is about 0.301. Suppose you are an auditor for a very large corporation. The revenue report involves millions of numbers in a large computer file. Let us say you took a random sample of n = 250 numerical entries from the file and r = 60 of the entries had a first nonzero digit of 1. Let p represent the population proportion of all numbers in the corporate file that have a first nonzero digit of 1. Test the claim that p is less than 0.301 by using α = 0.01. What does the area of the sampling distribution corresponding to your P-value look like? a. The area in the right tail of the standard normal curve. b. The area not including the right tail of the standard normal curve.…
Please solve (b) only!
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