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Abiodun Ojemakinde, Professor

Econ 3205 Economic & Business Statistics

Chap 4 Hw Assignment (30 points)

Instructions:

1. Students should review Chap 4 Supplemental Note (Excel Lab Solutions) posted in

GaView, Module 4, for guidelines.

2. Each student must submit his/her current original work on this assignment. Students

may contact/see the instructor for assistance on the assignment.

3. Any form of cheating, including copied work or work allowed to be copied or any form of

plagiarism, will result in cancellation of Hw assignment, and a zero score will be

assigned. Late assignment or assignment not submitted/uploaded in GaView

Assignment Submission Folder will not be graded but assigned zero.

4. Provide Microsoft Excel solutions to each question as applicable. Excel solutions must

contain verifiable Excel formulas/commands; credit will not be given for typing manual

solutions into Excel Spreadsheets.

5. Submit/upload your Excel Spreadsheets (one file) with clearly shown answer(s) to each

question in the case below. Students must manually enter data on the Excel

Spreadsheet for this case.

QuickBucks Inc. is a real estate company in Albany, Georgia. The company management

claims that the probabilities that a house listed with the company will be sold under 30 days,

between 30-59 days, between 60-89 days, or at least 90 days are 0.12, 0.35, 0.40, and 0.13,

respectively. A summary of the company’s home sales in the past year is as follows:

Initial Asking Price

Days Listed Until Sold

Under $50,000

$(50,000-99,999)

at least $100,000

0-29

35

30

30

30-59

40

140

265

60-89

25

80

95

>= 90

15

50

150

(a) Apply Bayes theorem and estimate appropriate posterior (revised conditional)

probabilities (in 4 decimal points) for the events in the situation presented. Provide an

Excel Spreadsheet showing your analytical results and the steps taken for your analysis.

(b) With your estimates in your Excel Spreadsheet in (a), answer the following questions (in

4 decimal points):

1. What is the probability that a house will be sold under 30 days, if its initial asking

price is less than $50,000?

2. What is the probability that a house will be sold in 60-89 days, if its initial asking

price is $75,000?

3. What is the probability that a house will be sold in 90 days or more, if its initial

asking price is $150,000?

(c) What are the conditions that must be met for your estimates in (a) above to be valid?

Explain how these conditions are met in this case.

.end
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Tags:

business and finance

accounting

Business statistics

probabilities

bayes theorem

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