Stat

Complete the following basic probability question from the Quantitative Reasoning: Tools for Today’s Informed Citizen text:

1)     Topic 18, Exploration 3

The following table contains information on the 2002 resident population of the U.S., by age. (Source: The New York Times Almanac 2004, page 277.)

Age

|Age |Younger than 18 years old |18 to 24 years old |

| | |1 |2 |3 |

|Recession |0.1 |9% |3% |15% |

|Stable |0.7 |13 |10 |11 |

|Boom |0.2 |17 |22 |5 |

a. Calculate each project’s expected return, variance, and standard deviation.

Expected return for Project 1: 0.1(9) + 0.7(13) + 0.2(17) = 13.4%

Expected return for Project 2: 0.1(3) + 0.7(10) + 0.2(22) = 11.7%

Expected return for Project 3: 0.1(15) + 0.7(11) + 0.2(5) = 10.2%

Variance: (2 = ( Pn(xn-X)2 Standard Deviation: ((2 = (( Pn(xn-X)2

Pn= probability

X = Mean = Expected return = ( Pnxn

|Project 1 | | | | | |

| |Pn |x |PnXn |(x-X)^2 |Pn(x-X)^2 |

|Recession |0.1 |9 |0.9 |19.36 |1.936 |

|Stable |0.7 |13 |9.1 |0.16 |0.112 |

|Boom |0.2 |17 |3.4 |12.96 |2.592 |

| | |X |13.4% |σ^2 |4.64% |

| | |...