Problems

1. Identify the following random variables as discrete or continuous:

   • Number of games Kerry Wood wins for the Chicago Cubs next season

   • Number that comes up when spinning a roulette wheel

   • Unit sales of Tablet PCs next year

   • Length of time that a light bulb lasts before it burns out

2. Compute the mean, variance, and standard deviation of the number of dots showing when a die is tossed.

3. Determine whether the following random variables are independent:

   • Daily temperature and sales at an ice cream store

   • Suit and number of a card drawn from a deck of playing cards

   • Inflation and return on the stock market

   • Price charged for and the number of units sold of a car

4. The current price of a company’s stock is $20. The company is a takeover target. If the takeover is successful, the company’s stock price will increase to $30. If the takeover is unsuccessful, the stock price will drop to $12. Determine the range of values for the probability of a successful takeover that would make it worthwhile to purchase the stock today. Assume your goal is to maximize your expected profit. Hint: Use the Microsoft Office Excel 2007 Goal Seek command, which is discussed in detail in Chapter 16, “The Goal Seek Command.”