2. Consider a trader with initial fund given by Toholding 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:15, and the transaction cost function of||S0.5, if a; = $8|0.5, if x; = $2P(x:) =Let a random variable îñ be the profit of trading at each time t, t = 1, 2, . ..,T,(b)Consider now that the trader's utility function is described byu(ñ) = µ(7).What is now the optimal level of position and the associated equilibrium profits?

Introduction initial fund has given 15 and the transaction cost of the traders has given as C(q) =…

2. Consider a trader with initial fund given by To holding q shares of stock i is C(q) = 10 + q². The price (x;) at which this trader sells its position is stochastically distributed according to the following probability distribution: 15, and the transaction cost function of J0.5, if a; = $8 0.5, if x; = $2 P(x;) = Let a random variable ñ be the profit of trading at each time t, t = 1, 2, ... ,T, (Ъ) Consider now that the trader's utility function is described by u(ñ) = µ(r). What is now the optimal level of position and the associated equilibrium profits?

2. Consider a trader with initial fund given by To holding q shares of stock i is C(q) = 10 + q². The price (x;) at which this trader sells its position is stochastically distributed according to the following probability distribution: 15, and the transaction cost function of J0.5, if a; = $8 0.5, if x; = $2 P(x;) = Let a random variable ñ be the profit of trading at each time t, t = 1, 2, ... ,T, (Ъ) Consider now that the trader's utility function is described by u(ñ) = µ(r). What is now the optimal level of position and the associated equilibrium profits?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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