Sampling distribution for proportion
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Question 1
After hearing of the national results that 44% of students engage in binge drinking (5 drinks ata a sitting for men, 4 for women), a professor surveyed a random sample of 244 students at his college and found that 96 of them admitted to binge drinking in the past week. Should he be surprized at this result? Explain.
Question 2
A day trader buys an option on stock that will return $100 profit if the stock goes up today and lose $400 if it goes down. If the trader thinks there is a 75% chance that the stock will go up, what is her expected value of the option's profit?
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Solution Summary
The solution comprises of step-by-step calculation and solutions to the given probability problems.
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Solution-1:
Here, we shall use the sampling distribution model for proportions to answer the given question.
p = 0.44
q = (1-p) = 0.56
n = 244
np = 107.36
nq = ...
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- MSc, Osmania University
- MSc, Indian Institute of Technology - Roorkee (I.I.T.-ROORKEE)
- BSc, Banaras Hindu University
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