A Group of Biologists Wish to Study the Life Span

question 14

Multiple Choice

A group of biologists wish to study the life span of the common housefly.They want to estimate the mean life span with 80% confidence and a width on the interval of estimation no greater than 1 hr.How many samples should they draw if a previous study indicates that the standard deviation of life span is 2.43 hr?

• A) 10
• B) 39
• C) 230
• D) 9

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Definitions:

Implicit Call Option

An option embedded in a financial security that allows the issuer to repurchase it at a predetermined price before maturity, not explicitly stated within the contract.

ESOs

Employee Stock Options (ESOs) are a form of equity compensation granted by companies to employees, allowing them to purchase company shares at a fixed price for a certain period.

Call Options

Financial derivatives that give the holder the right but not the obligation to buy a specific stock or asset at a predetermined price within a specified period.

American Call Option

An options contract that allows the holder to buy the underlying asset at a specified price at any time before or on the expiration date.