UNR, MATH/STAT 352, Spring 2007. Time EruptionWaiting timeEruption.

transcript

UNR, MATH/STAT 352, Spring 2007

TimeEruption Waiting time Eruption

Long waitShort wait

Long eruptionShort eruption

Short eruption, short wait

Long eruption, long wait

Conclusion:The longer the eruption, the longer the wait for the next one

http://www.worldviewofglobalwarming.org

Carbon DioxideCO2

Temperature

Carbon dioxide concentration is related to the Earth temperature

http://www.seed.slb.com

Carbon dioxide concentration is related to the Earth temperature

http://www.greendiary.com

Possible solution:Control CO2 to affect temperature

Each asset can be described by the (possible) distribution of future values.

Asset A

Asset B

Portfolio (A+B) ?

http://www.e-stockpro.com

Some processes (and random variables) are connected

We can measure (or control) one process to predict (or control) another

Thus, we need to a) manipulate with several random variablesb) establish connections among random variables

Experiment: tossing two dice, face of each die isa random variable with possible values {1,2,3,4,5,6}

Sample space

(3,1)(3,2)(3,3)(3,4)(3,5)(3,6)

(4,1)(4,2)(4,3)(4,4)(4,5)(4,6)

(5,1)(5,2)(5,3)(5,4)(5,5)(5,6)

(6,1)(6,2)(6,3)(6,4)(6,5)(6,6)

Second die (2nd random variable)

Each outcome (n,m)has probability

Experiment: observing two random variables X and Y

Sample spaceRandom variable Y

Probabilities canbe calculated using

density f(x,y)

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