Hw5 - I 2-5.5. The net winnings for the company are: $0...

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Unformatted text preview: I 2-5.5. The net winnings for the company are: $0 with probabitity 3/b l" llq case that thev do not win the bid; -$2 million with probability (2/5)(2/3) if they win the bid and do not find oil; or $4 million with prob- abilitv (215)(l/3) if they win the bid and do find oil. The expectation of the net winnings is therefore /4\/ 48 \ Yar(I() : 02 : EIK2I - tt, : I tr toltuio' - (0.ss5)2 4T <'J* , iL lc:o (Y) {t * lE 73 : 0'475-o'148:0'327' 0(3/5) - 2(4/15) * 4(2 /r5]| : o. 2.5.7. (SA) If -tr( : number of kings in the hand, then Note that the first term does not contribute anything to the value. Therefore, the terms of the above sum can be evaluated explicitly for k : 1,2,3, and 4. The answer is 0.385. For the 'rariance. Adf 2.5.8. db )l ,9,bU* - b)rl : -2Elx - bl : -2(Elxl- b) : o + b: ElXl. Since the ""cooh deri'vative with respect to b is 2 > O, we have a minimum' 2.5.L2.If rr is the dollar amount invested in the first asset, then (1000 - c1) will be invested iu the second. Let R1 and R2 be the two random t"i"s of return. R1 has mean pr : '05 and variance o? : '0001, and Rz has mean Fz : -03 and variance ol : '00005' The total return to the investor is R : crRt * (1000 - x)Rz- By the properties of mean and...
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This note was uploaded on 10/27/2010 for the course MATH 351 taught by Professor Moumen,f during the Spring '08 term at George Mason.

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Hw5 - I 2-5.5. The net winnings for the company are: $0...

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