section3_handout_stat104_josh

# section3_handout_stat104_josh - Stat 104 Section 3 Spring...

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Stat 104 Section 3, Spring 2011 Contact info 1. Josh Zagorsky, < > 2. Oﬃce Hours: Thursdays from 2pm-3pm in Science Center 600, or email for other times. Notes from p-set #2 1. β is the regression line slope coeﬃcient of a stock to the “market.” In the p-set, DIA, or “the Dow” is the “market.” You can ﬁnd the regression line slope by telling Stata to regress var1 var2 2. Portfolios do not have higher percent return than the individual stocks; they sometimes have lower risk. 3. When your y units shrink by a factor of n and your x units stay constant, your slope and intercept must both shrink by a factor of n . New concepts 1. Probability and Conditional Probability 2. Bayes’ Rule: P ( A | B ) = P ( B | A ) P ( A ) P ( B ) 3. Unions, intersections, complements, disjoint events 4. 2 × 2 tables 5. Independence of events

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Practice Problems: 1) I have 5 M&M’s left in the bag: 2 blue, 2 red, and 1 yellow. I plan on eating two more, and leaving the others in the bag. a) b) Describe the set of events for: A : B : c) What is the probability of: A : B : d) Are A & B disjoint? ________ How do you know? e) Describe (in terms of outcomes), D, the intersection of A & B ? and the union, E ? f) What is the probability of D ? of E ? g) Are A & B Independent? How do you know? h) Given you have eaten at least one blue M&M, what is the probability the other one was also blue? [Hint: start by writing this in terms of events
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section3_handout_stat104_josh - Stat 104 Section 3 Spring...

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