Name:
1. Lê Bảo Quyên - BAFNIU21555
2. Nguyễn Minh Anh - BAFNIU21394
3. Mai Vũ Quỳnh Anh - BAFNIU21398
4. Phạm Minh Dũng - BAFNIU21422
*Questions 10, 12, 18 (pages 19-21); 1, 5, 6 (pages 31-32)
Exercise 1.10 Two players play a tennis match, which ends when one of the players has won
two sets. Suppose that each set is equally likely to be won by either player, and that the results from
different sets are independent. Find
(a) the expected value
(b) the variance of the number of sets played.
Answer:
We call 2 players Player A and Player B.
To win (2 sets)
Players A (AA) 1/4
Players B (BB) 1/4
To win (3 sets)
Players A (ABA) 1/8 (BAA) 1/8
Players B (BAB) 1/8 (ABB) 1/8
Players A (ABA); (BAA)
Players B (BAB); (ABB)
P(AA) = P(A and A) = P(A) x P(A) = ½ x ½ = ¼
P(BB) = P(B and B) = P(B) x P(B) = ½ x ½ = ¼
P(A or B) = P(A) + P(B) = 1/2
P(ABA) = ½ * ½ * ½ = ⅛
P(BAA) = ½ * ½ * ½ = ⅛
P(BAB) = ½ * ½ * ½ = ⅛
P(ABB) = ½ * ½ * ½ = ⅛
P(A or B) = P(ABA) + P(BAA) + P(BAB) + P(ABB)= ½
Xi 2
Xi Pi
4 2 1/2
9 3 1/2
E[X] = 2*1/2 + 3*1/2 = 2.5.
E[X ] = 4*½ + 9*½ = 6.5.
2
Var(X)= E[X ] − (E[X]) = 6.5 − 6.25 = 0.25.
2 2
Exercise 1.12 A lawyer must decide whether to charge a fixed fee of $5,000 or take a
contingency fee of $25,000 if she wins the case (and 0 if she loses). She estimates that her
probability of winning is .30.
Determine the mean and standard deviation of her fee if
(a) she takes the fixed fee;
(b) she takes the contingency fee.
Answer:
(a) she takes the fixed fee
Xi 2
Xi Pi
25,000 5,000 1
E[X] = 1*5,000 = 5,000.
E[X ] = 1*25,000 = 25,000.
2
Var(X)= E[X ] − (E[X]) = 25,000 − 25,000 = 0.
2 2
Standard deviation = 0 =0.
(b) she takes the contingency fee.
In this case, let X = her fee.
Xi 2
Xi Pi
25,000 25,000 0.3
2
0 0 0.7
E[X] = 25,000*0.3 + 0*0.7 = 7,500.
E[X ] = 25,000 *0.3 = 187,500,000.
2 2
Var(X)= E[X ] − (E[X]) = 187,500,000 − 56,250,000 = 131,250,000.
2 2
Standard deviation = variance = 131,250,000 = 11,456.44
Exercise 1.18
Suppose that – in any given time period – a certain stock is equally likely to go up 1 unit or down
1 unit, and that the outcomes of different periods are independent. Let X be the amount the stock
goes up (either 1 or −1) in the first period, and let Y be the cumulative amount it goes up in the first
three periods. Find the correlation between X and Y.
Answer:
a certain stock is equally
=> P1 = P2 = 0.5
Go up 1 unit or down 1 unit
=> x1 = 1; x2 = -1
Xi Xi Pi
2
1 1 0.5
1 -1 0.5
E[X] = 1*0.5 − 1*0.5 = 0.
E[X ] = 1*0.5 + 1*0.5 = 1.
2
Var(X)= E[X ] − (E[X]) = 1 − 0 = 1.
2 2
Standard deviation X =variance = 1 = 1.
Y is the cumulative amount of the first 3 periods.
Y = x1 + x2 + x3.
E[Y] = E[x1] + E[x2] + E[x3] = 0
Var(Y) = Var(x1) + Var(x2) + Var(x3) = 1 + 1 + 1 = 3
Standard deviation Y = variance = 3.
Covariance (Xi; Y)
Cov(x1 and x1 + x2 + x3)
=> Cov(x1;X1) + Cov(x1;X2) + Cov(x1;X3)
The outcomes of different periods are independent => which covariance not related is 0
=> Cov(x1;X2) = 0; Cov(x1;X3) = 0
=> Cov(x1;X1) + Cov(x1;X2) + Cov(x1;X3) = Cov(x1;X1) = Var(X) = 1.
Correlation p(X;Y) = 1/(1*3) = 1/3
Exercise 2.1 For a standard normal random variable Z, find:
(a) P{Z < −.66};
= P(Z≤ 0) - P(-0.66 ≤ Z ≤ 0)
= P(Z≤ 0) - P(0≤ Z≤ 0.66 )
P(Z≤0) = 0.5
P(0 ≤ Z≤ 0.66) = 0.2454
=> 0.5 - 0.2454 = 0.2546
(b) P{|Z| < 1.64}
= P{−1.64 < Z < 1.64}
= P(Z < 1.64) − P(Z < -1.64)
= 0.9495 − 0.0505
= 0.898
(c) P{|Z| > 2.20}
= 1− P{|Z| < 2.20}
= 1 − 0.9861
= 0.0139
Exercise 2.5 The systolic blood pressure of male adults is normally distributed with a mean
of 127.7 and a standard deviation of 19.2.
(a) Specify an interval in which the blood pressures of approximately 68% of the adult male
population fall.
(b) Specify an interval in which the blood pressures of approximately 95% of the adult male
population fall.
(c) Specify an interval in which the blood pressures of approximately 99.7% of the adult male
population fall.
Answer
(a) 68% is 1 standard deviation of the mean
Formula: Mean ± 1* standard deviation
= 127.7 ± 19.2
= [127.7-19.2, 127.7+19.2]
= (108.5, 146.9)
So, 68% of the values are found to be between 108.5 and 146.9
(b) 95% is 2 standard deviation of the mean
Formula: Mean ± 2* standard deviation
= 127.7 ± 2*19.2
= [127.7-2*(19.2), 127.7+2*(19.2)]
= (89.3, 166.1)
Approximately 95% of the data lies between 89.3 and 166.1
(c) 99.7% is 3 standard deviation of the mean
Formula: Mean ± 3* standard deviation
= 127.7 ± 3*19.2
= [127.7-3*(19.2), 127.7+3*(19.2)]
= (70.1, 185.3)
Approximately 99.7% of the data lies between 70.1 and 185.3
Exercise 2.6 Suppose that the amount of time that a certain battery functions is a normal
random variable with mean 400 hours and standard deviation 50 hours. Suppose that an individual
owns two such batteries, one of which is to be used as a spare to replace the other when it fails.
(a) What is the probability that the total life of the batteries will exceed 760 hours?
(b) What is the probability that the second battery will outlive the first by at least 25 hours?
(c) What is the probability that the longer-lasting battery will outlive the other by at least 25 hours?
Answer
a) Mean: 400h, SD: 50h
2 independent batteries A and B
If C = A+B (total)
→ μ𝐶 = μ𝐵 +μ𝐴 = 800h
σ𝐶 =√σ𝐴 2 +σ𝐵 2 ≈70.71
P (A+B > 760) = P(C > 760)
760−800
= P(C > ) = P(C > - 0.57)
70.71
= 1 – P(C＜-0.57）
=1 – 28.43% = 71.57%
b) If D = B-A
→ μ𝐷 = μ𝐵 -μ𝐴 = 0h
σ𝐷 ≈ 70.71 (equal to question a))
25−0
P(B – A > 25) = P(D >25) =>P(D > )
70.71
= P (D > 0.35) = 1 - P(D < 0.35)
= 1- 63,68%
= 36. 32%
c) There are 2 situations of one more than another 25h (t = A – B or B – A)
so P(D>25)= 36.32% => P(t >25) = 2*36.32%
= 72.69%