Question

To flip a coin on a spreadsheet, you would use the Excel formula:

		=IF(a + (b – a)*RAND( )< 0.5, “Heads”, “Tails”), where a = 1 and b = 0
		=IF(RAND( )<0.5,”Heads”,”Tails”)
		=IF(NORM.INV(RAND(),0,1)<0.5, “Heads”, “Tails”)
		None of these formulas are correct

Answer 1

THE CORRECT ANSWER IS

=IF(RAND( )<0.5,”Heads”,”Tails”)

because

(i) IF(a + (b – a)*RAND( )< 0.5, “Heads”, “Tails”), where a = 1 and b = 0 will give us all the negative values as Rand() will give us all the values from 0 to 1and hence all the values will be less than 0.5

hence the answer will be Heads all the time

(ii) =IF(RAND( )<0.5,”Heads”,”Tails”) will estimate the correct results as there will be values from 0 to 1 with equal probabilities of more than 0.5 and less than 0.5 and hence this will give us right results

(iii) =IF(NORM.INV(RAND(),0,1)<0.5, “Heads”, “Tails”) is not the right formula as this function also gives all the values less than 1 as it gives the z value for mean 0 and sd 1 random number and hence the ans will be <0.5

SO HERE WE CONCLUDE THAT THE CORRECT ANS IS B