4. You are a bitcoin trader. You have $1,000,000, and today one bitcoin costs $2000. To- morrow bitcoins will either cost $1000 or $4000, each with equal probability. (Assume the prices are constant all day and change instantly at midnight.) For each of the following, give a strategy and why it's correct: (a) If you want to maximize the expected amount of money you have what should you tomorrow, do? (b) tomorrow, what should you do? If you want to maximize the expected number of bitcoins you have
4. You are a bitcoin trader. You have $1,000,000, and today one bitcoin costs $2000. To- morrow bitcoins will either cost $1000 or $4000, each with equal probability. (Assume the prices are constant all day and change instantly at midnight.) For each of the following, give a strategy and why it's correct: (a) If you want to maximize the expected amount of money you have what should you tomorrow, do? (b) tomorrow, what should you do? If you want to maximize the expected number of bitcoins you have
Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.5P
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![4. You are a bitcoin trader. You have $1,000,000, and today one bitcoin costs $2000. To-
morrow bitcoins will either cost $1000 or $4000, each with equal probability. (Assume
the prices are constant all day and change instantly at midnight.)
For each of the following, give a strategy and why it's correct:
(a)
If you want to maximize the expected amount of money you have
what should you do?
tomorrow,
(b)
tomorrow, what should you do?
If
you want to maximize the expected number of bitcoins you have](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F11f6a4a4-d923-4470-b609-05a8e0f37afd%2Fe73f32cd-e4a0-4999-bb0b-369c116fbd4e%2Fbwapm68_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. You are a bitcoin trader. You have $1,000,000, and today one bitcoin costs $2000. To-
morrow bitcoins will either cost $1000 or $4000, each with equal probability. (Assume
the prices are constant all day and change instantly at midnight.)
For each of the following, give a strategy and why it's correct:
(a)
If you want to maximize the expected amount of money you have
what should you do?
tomorrow,
(b)
tomorrow, what should you do?
If
you want to maximize the expected number of bitcoins you have
![5.
A company is hiring for an open position and has n interviews set up, one
per day. Each day, if the candidate is better than the current employee, the employee
is fired and the candidate is hired. Otherwise, the current employee keeps the job.
What is the expected number of hirings the company will make?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F11f6a4a4-d923-4470-b609-05a8e0f37afd%2Fe73f32cd-e4a0-4999-bb0b-369c116fbd4e%2Ftme3exs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5.
A company is hiring for an open position and has n interviews set up, one
per day. Each day, if the candidate is better than the current employee, the employee
is fired and the candidate is hired. Otherwise, the current employee keeps the job.
What is the expected number of hirings the company will make?
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