Assignment+1-sol

# Assignment+1-sol - Assignment 1. Problem1. a) Volatility is...

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Assignment 1. Problem1. a) Volatility is evaluated using Coefficient of variation, not standard deviation. The means for different stocks or funds may have big difference. b) Variance, SD, CV are all sensitive to the outliers, except interquartile range. To evaluate the variation of the data with outliers, we usually use interquartile range and Variance (or SD, or CV). Problem 2. a) Var = (sum of squares n * square of sample means )/(n-1)=(4000-20*100)/19 = 2000/19 = 105.3 b) CV= SD/sample mean=10.26/10=1.026 or 102.6% c) Because variance is never negative, we have the inequality : 2 2 2 1 2 2 2 1 ... x n x x x x n n + + + + Problem 3. Since we have 85 green and 15 blue cars, we can calculate marginal probability first: P(Green)=0.85, P(Blue)=0.15 . Also the witness only have correct identification chance 0.8, it means P(he reports green | green)=P(he reports blue | blue)=0.8 Now he report the cab involved in the accident is a blue cab (He reports Blue). Our target is to find the chance that the car involved is indeed blue given the witness reported

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## This note was uploaded on 08/26/2010 for the course ISOM ISOM111 taught by Professor Anthonychan during the Spring '09 term at HKUST.

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Assignment+1-sol - Assignment 1. Problem1. a) Volatility is...

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