Project Answer

Project Answer - proportion oF very satisfed people. STA103...

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STA 103 Fall 2007 Final Project Submitted by: I. H. Dinwoodie December 6, 2007 I have adhered to the Duke Community Standard in completing this assign- ment. 1
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STA103 Project 2 3 points each, 18 points total 1. Independence in a 4 × 4 Table (a) The ftted values are: Job SatisFaction very little moderately very Income ($1000) dissatisfed dissatisfed satisfed satisfed < 6 14.2 24.7 72.9 94.2 6-15 19.9 34.6 102.3 132.2 15-25 16.2 28.2 83.2 107.5 > 25 11.8 20.4 60.5 78.2 (b) The χ 2 statistic is 11.99 and the p -value is 0.21 (the area above 11.99 under the χ 2 (9) density). So the table does not contradict the null hypothesis oF independence. (c) The largest residual value in absolute value is +13.8, which occurs at “ > 25” Income and “very satisfed.” In other words, the inde- pendence model under predicts the number in this combination, and the population with highest salaries shows a relatively high
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Unformatted text preview: proportion oF very satisfed people. STA103 Project 3 2. Volatility of a Portfolio of Two Stocks (a) One can achieve volatility of 0.0105 in two ways. One can set = . 89 or = . 44 and either gives the value 0.0105. These can be read from a good graph or determined numerically. 0.0 0.2 0.4 0.6 0.8 1.0 0.0100 0.0105 0.0110 0.0115 0.0120 0.0125 0.0130 Graph of Portfolio Volatility Portfolio Volatility (b) The two choices of give diFerent expected returns. Since IBM has the higher expected return, the better portfolio is the one that puts more weight in IBM, so this gives = . 89 and a portfolio return of . 00140 = . 89 . 001402 + . 11 . 001365. (c) No, the volatility curve does not go as low as 0.010....
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Project Answer - proportion oF very satisfed people. STA103...

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