Statistics with Probability

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  • page-283. no-13 and no-3 in page-289
  • December 6, 2012 at 12:36 am #12941

    Afzal
    Participant

    i don’t have a idea what to do in this problem. can u help me with this problem professor….thank you.

    December 6, 2012 at 1:04 am #16066

    Afzal
    Participant

    can you also talk about no-3 in page-289.

    December 6, 2012 at 5:46 pm #16076

    Ezra Halleck
    Participant

    page-283. no-13: Yes, this is a confusing problem.
    First off, it is easy to restate what VAR is: it is the value v such that there is a 1% chance that the loss will be worse than that value.

    a) can be stated in a very easy way:
    Given an investment with mean 10 and sd 7, find the VAR.
    To answer, find the z score with input 1-.01=.99 and then destandardize.

    b) basically, you are asked to do what you did in a) but in general. Since z_.99=-2.33, if you destandardize, you get exactly what is being asked.

    page-289 no-3:a) since Z_.5=0 then x=6*0+50=50
    b) since Z_.1=1.282 then x=6*1.282+50 and so on

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