if u can answer the first question it would be helpful. Thank you. 2. Consider a trader with initial fund given by To = 15, and the transaction cost function ofholding q shares of stock i is C(q) = 10 + q². The price (x;) at which this trader sells itsposition is stochastically distributed according to the following probability distribution:J0.5, if a; = $8P(x;) =0.5, if x; = $2Let a random variable îñ be the profit of trading at each time t, t = 1, 2, ...,T,....1(a)If the trader's utility function is given byu(t) = M(#) - 당(%).where u(:) is the mean and o(-) is the variance, determine the trader's optimallevel of position, and the associated equilibrium profits from liquidate the completeposition.

Consumers' satisfaction or enjoyment with a product or service is represented by its usefulness.…

2. Consider a trader with initial fund given by To = 15, and the transaction cost function of holding q shares of stock i is C(q) = 10 + q². The price (x₂) at which this trader sells its position is stochastically distributed according to the following probability distribution: (0.5, 0.5, if x₂ = $2 if x₁ = $8 Let a random variable ♬ be the profit of trading at each time t, t = 1, 2, …, T, (a) If the trader's utility function is given by 1 u(ñ) = µ(ñ) — -—-0(ñ), P(x₁) = where μ() is the mean and o() is the variance, determine the trader's optimal level of position, and the associated equilibrium profits from liquidate the complete position.

2. Consider a trader with initial fund given by To = 15, and the transaction cost function of holding q shares of stock i is C(q) = 10 + q². The price (x₂) at which this trader sells its position is stochastically distributed according to the following probability distribution: (0.5, 0.5, if x₂ = $2 if x₁ = $8 Let a random variable ♬ be the profit of trading at each time t, t = 1, 2, …, T, (a) If the trader's utility function is given by 1 u(ñ) = µ(ñ) — -—-0(ñ), P(x₁) = where μ() is the mean and o() is the variance, determine the trader's optimal level of position, and the associated equilibrium profits from liquidate the complete position.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The disadvantages of using letters of credit for payment
what is Gross Savings and how is it calculated?
Compare the interest rates, fees, and other items between 3 mortgage companies or banks for a 15 year and 30 year mortgage of $300,000. Write down your findings. Then, Discuss what you have learned from this experience.
How is the time value of money a sophisticated concept?
What is the future worth of a series?
$200 is not the correct answer. Please credit my account for the wrong answer provided.
How does amortization help in making loans affordable?
what is the difference between Credit and Consumer credit?