Problem 1: The NU soccer team has 2 games scheduled for the weekend. It has a 0.

4 probability
of not losing the first game and a 0.7 probability of not losing the second game, independently of
the first game. If it does not lose a particular game, the team is equally likely to win or tie,
independently of what happens in the other game. The team will receive two points for a win, 1
point for a tie, and 0 for a loss. Find the PMF of the number of points that the team earns over the
weekend.

Problem 2: Fischer and Spassky play a chess match in which the first player to win wins the
match. After 10 consecutive draws, the match is declared drawn. Each game is won by Fischer
with a probability of 0.4, is won by Spassky with probability of 0.3, and is a draw with
probability of 0.3, independently of the previous games. What is the probability that Fischer wins
the match? Hint: First, determine the sample space. I found that using Excel was easy to solve
this problem.

Problem 3: You just rented a large house and the realtor gave you 5 keys, one for each of the
doors. They keys look all alike, so to open the front door, you try them at random. What is the
PMF of the number of trials you will need to open the door, if after each unsuccessful try, you
mark the key so you don’t try it again?

Problem 4: You want to buy a house and you go to your local bank to borrow the $400,000
needed for the house. You want a loan that you can repay over the course of 30 years, in
monthly installments. You ask the borrower for the nominal interest rate so that you can
compute your monthly payments. The borrower tells you, “Well, that will depend on your credit
score.” You get nervous because you know you have a couple of delinquent credit cards and a
couple of friends you haven’t paid back for the drinking money they loaned you on your first
week in college. As you are waiting for the banker to check your credit score, you quickly
perform a probabilistic analysis in your head as follows: You assume that if your credit score is
bad, which it is with a probability of 70%, you will get an annual interest rate of 8%. If your
credit score is mediocre, which it is with a probability of 25%, you will get an annual interest
rate of 7%. If you get a good credit score, which isn’t likely but still theoretically possible with a
probability of 5%, you will get a rate of 6%. What is the PMF of the random variable
representing the monthly payments you will have to make for this $400,000 loan, with an annual
interest rate as indicated above, compounded monthly?

Problem 5: Let X be a random variable with the following PMF:

x2
P( x) , if x -3,-2,- 1, 0,1, 2, 3
a
P(x) 0, otherwise
a) find a and the expected value of X, E[X]
b) What is the PMF of the random variable Z=(X – E[X])2
c) What is the variance of X, var(X)

Problem 6: As an advertising campaign, the Boston Red Sox place a golden ticket in the some of
its Fenway Franks, with the promise that a golden ticket allows you to throw out the ball on
Opening Day, and all the Fenway Franks you want for life. If the probability of finding a golden
ticket is 0.001, find the mean and variance of the number of Fenway Franks you need to eat to
find a ticket. Hint: You can do this mathematically, or, you can do this in Excel.