AnswersTest1 - NEW YORK UNIVERSITY DEPARTMENT OF ECONOMICS...

This preview shows pages 1–2. Sign up to view the full content.

NEW YORK UNIVERSITY DEPARTMENT OF ECONOMICS Statistics ECON-UB.18.011: Fall 2011 Professor Roman Frydman Solutions to TEST#1 Please answer all questions. Total 25 points. Problem 1 . (4 points) Consider the following sample { 1, 2, 3, 4, 5 } . A) What number should be added or subtracted to each one of numbers in the sample, so the resulting sample has a mean zero? Compute and brie±y explain. Answer: Sample average should be subtracted: Here, the sample average of the 5 numbers is 3. B) By what number should you divide each number in the sample, so the resulting sample has a variance of 1? Answer: Each number should be divided by sample standard de- viation so that te sample has sample standard deviation of 1 (note that sample standard deviation of 1 implies sample variance of 1). Here, sample standard deviation is 2 . 5. Problem 2 . (5 points) Consider two randomly selected corporate bonds: A and B. Suppose that the probability that bond A defaults is 0.5. If bond A defaults, the probability that bond B defaults is 0.75, whereas if bond A does not

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 4

AnswersTest1 - NEW YORK UNIVERSITY DEPARTMENT OF ECONOMICS...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online