The relationship between "strength" and "fineness" of cotton fibers was the subject of a study that produced the following data. (Give your answers correct to two decimal places.)
| x, Strength | 75 | 87 | 70 | 78 | 74 | 75 | 86 | 71 | 71 | 70 |
| y, Fineness | 4.4 | 3.9 | 4 | 4.5 | 3.8 | 4 | 4.1 | 3.7 | 4.9 | 4.9 |
(a) Draw a scatter diagram. (Do this on paper. Your instructor
may ask you to turn in this work.)
(b) Find the 90% confidence interval for the mean measurement of
fineness for fibers with a strength of 73.
| Lower Limit | |
| Upper Limit |
(c) Find the 99% prediction interval for an individual measurement
of fineness for fibers with a strength of 73.
| Lower Limit | |
| Upper Limit |
In: Statistics and Probability
When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star cost about $8. Based on actuarial tables, “Joltin’ Joe” could expect to live for 25 years after the actress died. Assume that the EAR is 8.9 percent. Also, assume that the price of the flowers will increase at 3.8 percent per year, when expressed as an EAR. Assume that each year has exactly 52 weeks, and Joe began purchasing flowers the week after Marilyn died. What is the present value of this commitment?
In: Finance
Researchers studying the effect of diet on growth would like to know if a vegetarian diet affects the height of a child. Twelve students are randomly selected that are all 6-years old. The average height of these kids is 42.5 inches with a standard deviation of 3.8 inches. The average height of all 6-year old kids is found to be 45.75 inches. Conduct a hypothesis test to determine if there is overwhelming evidence at alpha = .05 that 6-year old vegetarian kids are not the same height as other six year-old kids.
A. alpha = .05, 1.96 , -3.0
B. 2 tail, +/- 2.201, Reject Ho
C. 2.33, alpha = .05, 1.645
D. 1 tail, 1.645, 1.414
E. 2 tail, 2.052, 2.963
In: Statistics and Probability
Suppose you are an importer of olive oil from Greece to the Switzerland. You are preparing to import an olive oil shipment of 100,000 lbs that will require payment in Euro (€) in 3 months. The payment’s exact amount will depend on both the CHF/€ exchange rate, as well as the price for oil, which is a function of uncertain supply conditions in Greece. You project the following six scenarios with regards to the price of olive oil in 3 months:
Scenario Price (€/lb of oil)
1 2.1
2 2.3
3 3.8
4 1.8
5 3.0
6 2.8
a) What can you do today if your goal is to completely hedge this €-exposure?
b) Suppose that 3 months from now, scenario # 3 materializes. What will you do?
In: Accounting
|
Table.1 |
Risky Asset 1 |
Risky Asset 2 |
|
Expected Return |
0.12 |
.16 |
|
Standard Deviation |
0.29 |
.89 |
The coefficient of correlation ρ between these two assets is equal to .009, and the risk free rate is 3.8%.
1) If you wished to construct the optimal risky portfolio using these two assets, what percentage this portfolio would consist of Asset 1?
2) What is the expected return of the portfolio from question 1?
3) What is the standard deviation of the portfolio from question 1?
4) If Rachel has a coefficient of risk aversion of 4.9, what percentage of her money should she invest in the riskless asset if the only risky assets she can invest in are the ones described above?
In: Finance
|
Risky Asset 1 |
Risky Asset 2 |
|
|
Expected Return |
0.11 |
.15 |
|
Standard Deviation |
0.28 |
.88 |
The coefficient of correlation ρ between these two assets is equal to .009, and the risk free rate is 3.8%.
2A. If you wished to construct the optimal risky portfolio using these two assets, what percentage this portfolio would consist of Asset 1? (10 points)
2B. What is the expected return of the portfolio from 2A?
2C. What is the standard deviation of the portfolio from 2A?
2D. If Rachel has a coefficient of risk aversion of 4.9, what percentage of her money should she invest in the riskless asset if the only risky assets she can invest in are the ones described above?
In: Finance
|
Risky Asset 1 |
Risky Asset 2 |
|
|
Expected Return |
0.11 |
.15 |
|
Standard Deviation |
0.28 |
.88 |
coefficient of correlation ρ between these two assets is equal to .009, and the risk-free rate is 3.8%.
1. If you wished to construct the optimal risky portfolio using these two assets, what percentage this portfolio would consist of Asset 1?
2. What is the expected return of the portfolio from question 1?
3. What is the standard deviation of the portfolio from question 1?
4. If Rachel has a coefficient of risk aversion of 4.9, what percentage of her money should she invest in the riskless asset if the only risky assets she can invest in are the ones described above?
In: Finance
|
Stackhouse Industries has a new project available that requires an initial investment of $4.5 million. The project will provide unlevered cash flows of $675,000 per year for the next 20 years. The company will finance the project with a debt-to-value ratio of .40. The company’s bonds have a YTM of 6.8 percent. The companies with operations comparable to this project have unlevered betas of 1.15, 1.08, 1.30, and 1.25. The risk-free rate is 3.8 percent, and the market risk premium is 7 percent. The company has a tax rate of 34 percent. |
|
What is the NPV of this project? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| NPV |
$ |
In: Finance
Suppose you are an importer of olive oil from Greece to the
Switzerland. You are preparing to
import an olive oil shipment of 100,000 lbs that will require
payment in Euro (€) in 3 months. The
payment’s exact amount will depend on both the CHF/€ exchange rate,
as well as the price for oil,
which is a function of uncertain supply conditions in Greece. You
project the following six scenarios
with regards to the price of olive oil in 3 months:
Scenario ------ Price (€/lb of oil)
1 ------ 2.1
2 ------ 2.3
3 ------ 3.8
4 ------ 1.8
5 ------ 3.0
6 ------ 2.8
a) What can you do today if your goal is to completely hedge this
€-exposure?
b) Suppose that 3 months from now, scenario # 3 materializes. What
will you do?
In: Finance
4. The following are 20 observations of response times (in seconds) from a random sample of participants on a cognitive psychology task:
1.7 0.8 4.3 2.9 2.3 1.1 2.2 1.8 2.0 1.2 4.4 1.6 3.8 1.5 2.8
3.3 1.8 2.5 2.7 1.6
(a) Calculate the mean and unbiased standard deviation of the response times.
(b) Construct and interpret a 95% confidence interval for μ, which is the true mean response time. Assume that σ = 1.5.
(c) Construct and interpret a 90% confidence interval for μ, which is the true mean response time. Assume that σ is unknown.
(d) What would happen to the width of your confidence interval if our sample size increased? Explain.
In: Statistics and Probability