1) All athletes at the Plympic games are tested for performance-enhancing steroid drug use. The imperfect test gives positive results (indicating drug use) for 92% of all steroid-users but also (and incorrectly) for 3% of those who do not use steroids. Suppose that 6% of all registered athletes use steroids. (a) What is the probability that the imperfect test gives negative result of all steroid-users? (b) What is the probability that the imperfect test gives negative result of all athletes do not use steroids? (c) If an athlete is tested negative, what is the probability that he/she does NOT steroids? 2) Shares of company A are sold at $20 per share. Shares of company B are sold at $50 per share. According to a market analyst, company A's expected return is $1 per share with a standard deviation of $0.5. And company B's expected return is $2.50 per share with a standard deviation of $1. In order to maximize the expected return and minimize the risk (standard deviation or variance), which of the following investment is better (1) 100 shares of A (2) 50 shares of A and 20 shares of B (3) 40 shares of B
1) All athletes at the Plympic games are tested for performance-enhancing steroid drug use. The imperfect test gives positive results (indicating drug use) for 92% of all steroid-users but also (and incorrectly) for 3% of those who do not use steroids. Suppose that 6% of all registered athletes use steroids.
(a) What is the
(b) What is the probability that the imperfect test gives negative result of all athletes do not use steroids?
(c) If an athlete is tested negative, what is the probability that he/she does NOT steroids?
2) Shares of company A are sold at $20 per share. Shares of company B are sold at $50 per share. According to a market analyst, company A's expected return is $1 per share with a standard deviation of $0.5. And company B's expected return is $2.50 per share with a standard deviation of $1. In order to maximize the expected return and minimize the risk (standard deviation or variance), which of the following investment is better
(1) 100 shares of A (2) 50 shares of A and 20 shares of B (3) 40 shares of B
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