Question 1

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 expected value gain for the house in neighborhood B?

Accepted Answer

$ 21,300

Question 2

A campus program evenly enrolls undergraduate and graduate students.If a random sample of 4
Students is selected from the program to be interviewed about the introduction of a new fast food
Outlet on the ground floor of the campus building, what is the probability that all 4 students
Selected are undergraduate students?

Accepted Answer

A)   0.0256
B)   0.0625
C)   0.16
D)   1.00 B

Question 3

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, if you decide to choose Design A for half of the production lines and
Design B for the other half, what is the risk of your investment?

Accepted Answer

$31.241 thousands or $31,241

Question 4

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 total standard deviation of value gain if you invest in
both houses?

Accepted Answer

The answer of SCENARIO 5-1
There are two houses with almost...

Question 5

A probability distribution is an equation that

Accepted Answer

A)   associates a particular probability of occurrence with each outcome.
B)   measures outcomes and assigns values of X to the simple events.
C)   assigns a value to the variability of the set of events.
D)   assigns a value to the center of the set of events.

Question 6

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, if you decide to choose Design A for half of the production lines and
Design B for the other half, what is your expected profit?

Accepted Answer

The answer of SCENARIO 5-2
Two different designs on a new...

Question 7

True or False: The variance of the sum of two investments will be equal to the sum of the
variances of the two investments plus twice the covariance between the investments.

Accepted Answer

A) True 
 B)False

Question 8

The connotation "expected value" or "expected gain" from playing roulette at a casino means

Accepted Answer

A)   the amount you expect to "gain" on a single play.
B)   the amount you expect to "gain" in the long run over many plays.
C)   the amount you need to "break even" over many plays.
D)   the amount you should expect to gain if you are lucky.

Question 9

True or False: The largest value that a Poisson random variable X can have is n.

Accepted Answer

A) True 
 B)False

Question 10

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 you can invest 90% of your money on the house in neighborhood
A and the remaining on the house in neighborhood B, what is the portfolio risk of your
investment?

Accepted Answer

The answer of SCENARIO 5-1
There are two houses with almost...

Question 11

True or False: The number of males selected in a sample of 5 students taken without replacement
from a class of 9 females and 18 males has a hypergeometric distribution.

Accepted Answer

A) True 
 B)False

Question 12

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 you can invest 10% of your money on the house in neighborhood
A and the remaining on the house in neighborhood B, what is the portfolio expected return of
your investment?

Accepted Answer

The answer of SCENARIO 5-1
There are two houses with almost...

Question 13

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 total variance of value gain if you invest in both houses?

Accepted Answer

The answer of SCENARIO 5-1
There are two houses with almost...

Question 14

A professor receives, on average, 24.7 e-mails from students the day before the midterm exam.
To compute the probability of receiving at least 10 e-mails on such a day, he will use what type
Of probability distribution?

Accepted Answer

A)   binomial distribution.
B)   Poisson distribution.
C)   hypergeometric distribution.
D)   none of the above.

Question 15

In a binomial distribution

Accepted Answer

A)   the variable X is continuous.
B)   the probability of event of interest  is stable from trial to trial.
C)   the number of trials n must be at least 30.
D)   the results of one trial are dependent on the results of the other trials.

Question 16

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 you can invest 90% of your money on the house in neighborhood
A and the remaining on the house in neighborhood B, what is the portfolio expected return of
your investment?

Accepted Answer

The answer of SCENARIO 5-1
There are two houses with almost...

Question 17

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 the standard deviation of your profit when Design A is
chosen?

Accepted Answer

The answer of SCENARIO 5-2
Two different designs on a new...

Question 18

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 the variance of your profit when Design B is chosen?

Accepted Answer

The answer of SCENARIO 5-2
Two different designs on a new...

Question 19

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 you can invest 30% of your money on the house in neighborhood
A and the remaining on the house in neighborhood B, what is the portfolio risk of your
investment?

Accepted Answer

The answer of SCENARIO 5-1
There are two houses with almost...

Question 20

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 you can invest 30% of your money on the house in neighborhood
A and the remaining on the house in neighborhood B, what is the portfolio expected return of
your investment?

Accepted Answer

The answer of SCENARIO 5-1
There are two houses with almost...

Exam 5: Discrete Probability Distributions

A probability distribution is an equation that

True or False: The variance of the sum of two investments will be equal to the sum of the variances of the two investments plus twice the covariance between the investments.

The connotation "expected value" or "expected gain" from playing roulette at a casino means

True or False: The largest value that a Poisson random variable X can have is n.

True or False: The number of males selected in a sample of 5 students taken without replacement from a class of 9 females and 18 males has a hypergeometric distribution.

A professor receives, on average, 24.7 e-mails from students the day before the midterm exam. To compute the probability of receiving at least 10 e-mails on such a day, he will use what type Of probability distribution?

In a binomial distribution