A possible important environmental determinant of lung function in children is amount of cigarette smoking in the home. Suppose this question is studied by selecting two groups: Group 1 consists of 23 nonsmoking children 5-9 years of age with two parents who smoke, and have mean forced expiratory volume (FEV) of 2.1 L and a standard deviation of 0.7 L; group 2 consists of 20 nonsmoking children of comparable age, with two parents who do not smoke, and have mean FEV of 2.3 L and a standard deviation of 0.4 L.

Consider a pool of 800 mortgages with the average size being $500 thousands, which is expected to be paid off in 20 years with fortnightly frequency (26 payments per year). The annual mortgage interest is 4.5%.

1. Estimate the value of fortnightly mortgage payments from the pool .
2. Suppose that the servicing fee is 0.7%, fill in the following table .

In a study, researchers wanted to measure the effect of alcohol on the hippocampal region, the portion of the brain responsible for long term memory storage in adolescents. The researchers randomly selected 24 adolescents with alcohol use disorders to determine whether the hippocampal volumes in the alcoholic adolescents were less than the normal volume of 9.02 cm. An analysis of the sample data revealed that the hippocampal volume is approximately normal with no outliers and x bar=8.12 cm and s= 0.7 cm. Conduct the appropriate test at the 0.01 level of significance. Identify the P-Value and whether or not the null needs to be rejected or accepted.

1) critically differentiate between forward and future contracts.

2 a ltd intends buy 10,000 Rands in three months time . the following information is available.

sport rate 0.67,the forward rate in three months is 0.7, how can a ltd hedge against foreign exchange fluctuation clearly explaining the implication to ltd should the sport rate in three months time be more or less than the forward rate?

3) differentiate between the following types of markets.

a)capital and money markets

b) primary and secondary markets

c) bond and equity markets

Suppose there are two independent economic factors, M₁ and M₂. The risk-free rate is 4%, and all stocks have independent firm-specific components with a standard deviation of 49%. Portfolios A and B are both well diversified.

What is the expected return–beta relationship in this economy? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Expected return–beta relationship E(r_P) = % + β_P1 + β_P2

The gypsy moth is a serious threat to oak and aspen trees. A state agriculture department places traps throughout the state to detect the moths. When traps are checked periodically, the mean number of moths trapped is only 0.5, but some traps have several moths. The distribution of moth counts is discrete and strongly skewed, with standard deviation 0.7.

(a) What are the mean and standard deviation of the average number of moths x⎯⎯⎯x¯ in 65 traps?
(b) Use the central limit theorem to find the probability that the average number of moths in 65 traps is greater than 0.4.

A company is expected to have earnings of $3.46 per share next year, $4.19 in two years, and $5.58 in three years. The dividend payout ratio is expected to remain at 40% over the next three years. You estimate the risk-free rate to be 5% per year and the expected market risk premium to be 6% per year. In two years, you expect the lagging PE ratio to be 14. The beta of the stock is 0.7. What would be an appropriate estimate of the stock price today? (Answer to the nearest penny, i.e. 55.55 but do not use a $ sign).

You own a lot in Lowell, Massachusetts that is currently unused. Similar lots have recently sold for $0.7 million. Over the past five years, the price of land in the area has increased 8 percent per year, with an annual standard deviation of 12 percent. A buyer has recently approached you and wants an option to buy the land in the next 12 months for $0.77 million. The risk-free rate of interest is 3 percent per year, compounded continuously. How much should you charge for the option? $16,877.44 $15,996.12 $14,762.58 $13,267.79 $12,196.55

You own a lot in Lowell, Massachusetts that is currently unused. Similar lots have recently sold for $0.7 million. Over the past five years, the price of land in the area has increased 8 percent per year, with an annual standard deviation of 12 percent. A buyer has recently approached you and wants an option to buy the land in the next 12 months for $0.77 million. The risk-free rate of interest is 3 percent per year, compounded continuously. How much should you charge for the option?

If x is a binomial random variable, compute P(x) for each of the following cases:

(a)  P(x≤5),n=9,p=0.7P(x≤5),n=9,p=0.7

(b)  P(x>1),n=9,p=0.1P(x>1),n=9,p=0.1

(c)  P(x<3),n=5,p=0.6P(x<3),n=5,p=0.6

(d)  P(x≥1),n=6,p=0.9P(x≥1),n=6,p=0.9