Exam 5: Discrete Probability Distributions

SCENARIO 5-2 Two different designs on a new line of winter jackets for the coming winter are available for your manufacturing plants.Your profit (in thousands of dollars)will depend on the taste of the consumers when winter arrives.The probability of the three possible different tastes of the consumers and the corresponding profits are presented in the following table. -Referring to Scenario 5-2, the table above is called the ______________ for the two designs.

True or False: The number of customers arriving at a department store in a 5-minute period has a Poisson distribution.

A lab orders 100 rats a week for each of the 52 weeks in the year for experiments that the lab Conducts.Suppose the mean cost of rats used in lab experiments turned out to be $13.00 per Week.Interpret this value.

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, what is the variance of the gain in value for the house in neighborhood B?

True or False: Another name for the mean of a probability distribution is its expected value.

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, if your investment preference is to minimize the amount of risk that you have to take and do not care at all about the expected return, will you choose a portfolio that will consist of 10%, 30%, 50%, 70%, or 90% of your money on the house in neighborhood A and the remaining on the house in neighborhood B?

A financial analyst is presented with information on the past records of 60 start-up companies And told that in fact only 3 of them have managed to become highly successful.He selected 3 Companies from this group as the candidates for success.To analyze his ability to spot the Companies that will eventually become highly successful, he will use what type of probability Distribution?

The covariance

True or False: If the covariance between two investments is zero, the variance of the sum of the two investments will be equal to the sum of the variances of the investments.

What type of probability distribution will most likely be used to analyze the number of cars with Defective radios in the following problem? From an inventory of 48 new cars being shipped to local dealerships, corporate reports Indicate that 12 have defective radios installed.The sales manager of one dealership wants to Predict the probability out of the 8 new cars it just received that, when each is tested, no More than 2 of the cars have defective radios.

True or False: The Poisson distribution can be used to model a continuous random variable.

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, if your investment preference is to maximize your expected return while exposing yourself to the minimal amount of risk, will you choose a portfolio that will consist of 10%, 30%, 50%, 70%, or 90% of your money on the house in neighborhood A and the remaining on the house in neighborhood B?

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, what is the variance of the gain in value for the house in neighborhood A?

SCENARIO 5-2 Two different designs on a new line of winter jackets for the coming winter are available for your manufacturing plants.Your profit (in thousands of dollars)will depend on the taste of the consumers when winter arrives.The probability of the three possible different tastes of the consumers and the corresponding profits are presented in the following table. -Referring to Scenario 5-2, what is your expected profit when Design B is chosen?

True or False: In a Poisson distribution, the mean and standard deviation are equal.

What type of probability distribution will most likely be used to analyze warranty repair needs on New cars in the following problem? The service manager for a new automobile dealership reviewed dealership records of the past 20 sales of new cars to determine the number of warranty repairs he will be called on to Perform in the next 90 days.Corporate reports indicate that the probability any one of their New cars needs a warranty repair in the first 90 days is 0.05.The manager assumes that calls For warranty repair are independent of one another and is interested in predicting the number Of warranty repairs he will be called on to perform in the next 90 days for this batch of 20 New cars sold.

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, what is the covariance of the two houses?

True or False: The expected return of a two-asset portfolio is equal to the product of the weight assigned to the first asset and the expected return of the first asset plus the product of the weight assigned to the second asset and the expected return of the second asset.

True or False: The variance of the sum of two investments will be equal to the sum of the variances of the two investments when the covariance between the investments is zero.