Refer to Table 19.1.

a. Verify the regression coefficients in equation (19.12).
b. Perform the analysis for t = 1, verifying that exercise is optimal on paths 4, 6, 7, and 8, and not on path 1.

Transcribed Image Text:

Discounted (S) (Prob. x Payoff) 3.649 1.222 1.133 1070 Discount Rates Along Patlh Discount Rate Prob. Payoff Path uuu 35.7% 32.3% 26.9% uud 35.7% 32.3% 26.9% udu 35.7% 32.3% 49.5% duu 35.7% 49.5% 49.5% udd dud for Path 3 1.64% 3 1.64% 30.1 8% 44.91% of Path (S) 0.1444 34.678 0.1308 12.814 0.1308 12.814 0.1308 12.814 0 0 0 0 0 0 0 7.074 Ll Sum