Pearson eText for College Mathematics for Trades and Technologies -- Instant Access (Pearson+)
10th Edition
ISBN: 9780137400010
Author: Cheryl Cleaves, Margie Hobbs
Publisher: PEARSON+
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Chapter 1, Problem 21PT
To determine
The average test score and round to the nearest whole number.
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For each month of the year, Taylor collected the average high temperatures in Jackson, Mississippi. He used the data to create the histogram shown. Which set of data did he use to create the histogram?
A
55, 60, 64, 72, 73, 75, 77, 81, 83, 91, 91, 92\ 55,\ 60,\ 64,\ 72,\ 73,\ 75,\ 77,\ 81,\ 83,\ 91,\ 91,\ 92 55, 60, 64, 72, 73, 75, 77, 81, 83, 91, 91, 92
B
55, 57, 60, 65, 70, 71, 78, 79, 85, 86, 88, 91\ 55,\ 57,\ 60,\ 65,\ 70,\ 71,\ 78,\ 79,\ 85,\ 86,\ 88,\ 91 55, 57, 60, 65, 70, 71, 78, 79, 85, 86, 88, 91
C
55, 60, 63, 64, 65, 71, 83, 87, 88, 88, 89, 93\ 55,\ 60,\ 63,\ 64,\ 65,\ 71,\ 83,\ 87,\ 88,\ 88,\ 89,\ 93 55, 60, 63, 64, 65, 71, 83, 87, 88, 88, 89, 93
D
55, 58, 60, 66, 68, 75, 77, 82, 86, 89, 91, 91\ 55,\ 58,\ 60,\ 66,\ 68,\ 75,\ 77,\ 82,\ 86,\ 89,\ 91,\ 91 55, 58, 60, 66, 68, 75, 77, 82, 86, 89, 91, 91
In this problem, we consider a Brownian motion (W+) t≥0. We consider a stock model (St)t>0
given (under the measure P) by
d.St 0.03 St dt + 0.2 St dwt,
with So 2. We assume that the interest rate is r = 0.06. The purpose of this problem is to
price an option on this stock (which we name cubic put). This option is European-type, with
maturity 3 months (i.e. T = 0.25 years), and payoff given by
F = (8-5)+
(a) Write the Stochastic Differential Equation satisfied by (St) under the risk-neutral measure
Q. (You don't need to prove it, simply give the answer.)
(b) Give the price of a regular European put on (St) with maturity 3 months and strike K = 2.
(c) Let X =
S. Find the Stochastic Differential Equation satisfied by the process (Xt)
under the measure Q.
(d) Find an explicit expression for X₁ = S3 under measure Q.
(e) Using the results above, find the price of the cubic put option mentioned above.
(f) Is the price in (e) the same as in question (b)? (Explain why.)
Problem 4. Margrabe formula and the Greeks (20 pts)
In the homework, we determined the Margrabe formula for the price of an option allowing you to
swap an x-stock for a y-stock at time T. For stocks with initial values xo, yo, common volatility
σ and correlation p, the formula was given by
Fo=yo (d+)-x0Þ(d_),
where
In (±²
Ꭲ
d+
õ√T
and
σ = σ√√√2(1 - p).
дго
(a) We want to determine a "Greek" for ỡ on the option: find a formula for
θα
(b) Is
дго
θα
positive or negative?
(c) We consider a situation in which the correlation p between the two stocks increases: what
can you say about the price Fo?
(d) Assume that yo< xo and p = 1. What is the price of the option?
Chapter 1 Solutions
Pearson eText for College Mathematics for Trades and Technologies -- Instant Access (Pearson+)
Ch. 1.1 - Perform the indicated operations.
1 − 0.03
Ch. 1.1 - Perform the indicated operations.
0.2(0.03)
Ch. 1.1 - Perform the indicated operations.
1.5 ÷ 0.3
Ch. 1.1 - Write two inequalities to compare each pair of...Ch. 1.1 - Write two inequalities to compare each pair of...Ch. 1.1 - Write two inequalities to compare each pair of...Ch. 1.1 - Write two inequalities to compare each pair of...Ch. 1.1 - Write two inequalities to compare each pair of...Ch. 1.1 - Write two inequalities to compare each pair of...Ch. 1.1 - A house that sold for 183.500 four years ago has...
Ch. 1.1 - Touliatas Nursery sold 786 flats of annual bedding...Ch. 1.1 - The Orlando Renaissance Resort sold 758 rooms for...Ch. 1.1 - The first day a spam filter was installed at...Ch. 1.1 - Write the fractions as decimal numbers. See...Ch. 1.1 - Write the fractions as decimal numbers. See...Ch. 1.1 - Prob. 13ECh. 1.1 - Write the fractions as decimal numbers. See...Ch. 1.1 - Write the fractions as decimal numbers. See...Ch. 1.1 - Write the fractions as decimal numbers. See...Ch. 1.1 - Compare the number pairs and identify the larger...Ch. 1.1 - Prob. 18ECh. 1.1 - Prob. 19ECh. 1.1 - Two micrometer readings are recorded as 0.837 in....Ch. 1.1 - A micrometer reading for a part is 3.85 in. The...Ch. 1.1 - A washer has an inside diameter of 0.33 in. Will...Ch. 1.1 - Prob. 23ECh. 1.1 - Prob. 24ECh. 1.1 - A nurse recorded the weights of two patients as...Ch. 1.1 - Arrange in order from smallest to largest. See...Ch. 1.1 - Arrange in order from smallest to largest. See...Ch. 1.1 - Prob. 28ECh. 1.1 - To change centimeters to inches, multiply by...Ch. 1.1 - Give a reasonable approximate number for the...Ch. 1.1 - Prob. 31ECh. 1.1 - Prob. 32ECh. 1.1 - Prob. 33ECh. 1.1 - Round to the place value indicated. See Example 5....Ch. 1.1 - Round to the place value indicated. See Example 5....Ch. 1.1 - Prob. 36ECh. 1.1 - Prob. 37ECh. 1.1 - Prob. 38ECh. 1.1 - To the nearest tenth, what is the current of a...Ch. 1.1 - If round steak costs 2.78 per pound, what is the...Ch. 1.1 - Prob. 41ECh. 1.1 - Prob. 42ECh. 1.1 - Write in columns and add. See Example 7. 6,017 +...Ch. 1.1 - Prob. 44ECh. 1.1 - Prob. 45ECh. 1.1 - Write in columns and add. 12.8 + 13.52 + 7.86Ch. 1.1 - Prob. 47ECh. 1.1 - Prob. 48ECh. 1.1 - Prob. 49ECh. 1.1 - A part-time hourly worker earned 25.97 on Monday,...Ch. 1.1 - Prob. 51ECh. 1.1 - Prob. 52ECh. 1.1 - Prob. 53ECh. 1.1 - Prob. 54ECh. 1.1 - Estimate the sum for exercises 54–55 by rounding...Ch. 1.1 - Estimate the sum for exercises 54–55 by rounding...Ch. 1.1 - Prob. 57ECh. 1.1 - Prob. 58ECh. 1.1 - Palmer Associates provided the following prices...Ch. 1.1 - Prob. 60ECh. 1.1 - Prob. 61ECh. 1.1 - Prob. 62ECh. 1.1 - Prob. 63ECh. 1.1 - Prob. 64ECh. 1.1 - Prob. 65ECh. 1.1 - Prob. 66ECh. 1.1 - Prob. 67ECh. 1.1 - Prob. 68ECh. 1.1 - Prob. 69ECh. 1.1 - Prob. 70ECh. 1.1 - Prob. 71ECh. 1.1 - Prob. 72ECh. 1.1 - Subtract.
Subtract 13.5 from 21.
Ch. 1.1 - Prob. 74ECh. 1.1 - Subtract.
Find the difference between 42 and...Ch. 1.1 - According to a blueprint, the length of an object...Ch. 1.1 - Prob. 77ECh. 1.1 - Prob. 78ECh. 1.1 - Prob. 79ECh. 1.1 - Prob. 80ECh. 1.1 - Prob. 81ECh. 1.1 - Prob. 82ECh. 1.1 - Prob. 83ECh. 1.1 - Prob. 84ECh. 1.1 - Prob. 85ECh. 1.1 - Prob. 86ECh. 1.1 - Prob. 87ECh. 1.1 - Prob. 88ECh. 1.1 - Prob. 89ECh. 1.1 - Prob. 90ECh. 1.1 - Prob. 91ECh. 1.1 - Prob. 92ECh. 1.1 - Prob. 93ECh. 1.1 - Prob. 94ECh. 1.1 - Each officer in the Public Safety office wrote, on...Ch. 1.1 - Prob. 96ECh. 1.1 - Prob. 97ECh. 1.1 - Multiply the following.
Ch. 1.1 - Multiply the following.
Ch. 1.1 - Prob. 100ECh. 1.1 - Prob. 101ECh. 1.1 - Prob. 102ECh. 1.1 - Prob. 103ECh. 1.1 - Prob. 104ECh. 1.1 - Prob. 105ECh. 1.1 - Prob. 106ECh. 1.1 - Prob. 107ECh. 1.1 - BUS Premier Yard Service treats a lawn that is...Ch. 1.1 - Prob. 109ECh. 1.1 - Prob. 110ECh. 1.1 - Prob. 111ECh. 1.1 - Prob. 112ECh. 1.1 - Prob. 113ECh. 1.1 - Prob. 114ECh. 1.1 - Prob. 115ECh. 1.1 - Divide.
5.12 ÷ 4
Ch. 1.1 - Prob. 117ECh. 1.1 - Prob. 118ECh. 1.1 - Prob. 119ECh. 1.1 - Prob. 120ECh. 1.1 - Divide.
Ch. 1.1 - Prob. 122ECh. 1.1 - Prob. 123ECh. 1.1 - Prob. 124ECh. 1.1 - Prob. 125ECh. 1.1 - Prob. 126ECh. 1.1 - Prob. 127ECh. 1.1 - Prob. 128ECh. 1.1 - Prob. 129ECh. 1.1 - Prob. 130ECh. 1.1 - Prob. 131ECh. 1.1 - Prob. 132ECh. 1.1 - If 12 electrolytic capacitors cost $23.75, find...Ch. 1.1 - Prob. 134ECh. 1.1 - Prob. 135ECh. 1.1 - Prob. 136ECh. 1.1 - Prob. 137ECh. 1.1 - Prob. 138ECh. 1.1 - Find the average, then round to the same place...Ch. 1.2 - Write 23 in standard notation.
Ch. 1.2 - Find
Ch. 1.2 - Write 100 as a power of 10.
Ch. 1.2 - Prob. 1ECh. 1.2 - Prob. 2ECh. 1.2 - Prob. 3ECh. 1.2 - Prob. 4ECh. 1.2 - Prob. 5ECh. 1.2 - Prob. 6ECh. 1.2 - Prob. 7ECh. 1.2 - Prob. 8ECh. 1.2 - Prob. 9ECh. 1.2 - Prob. 10ECh. 1.2 - Prob. 11ECh. 1.2 - Prob. 12ECh. 1.2 - Prob. 13ECh. 1.2 - Prob. 14ECh. 1.2 - Prob. 15ECh. 1.2 - Prob. 16ECh. 1.2 - Prob. 17ECh. 1.2 - Prob. 18ECh. 1.2 - Prob. 19ECh. 1.2 - Prob. 20ECh. 1.2 - Prob. 21ECh. 1.2 - Prob. 22ECh. 1.2 - Prob. 23ECh. 1.2 - Prob. 24ECh. 1.2 - Prob. 25ECh. 1.2 - Prob. 26ECh. 1.2 - Prob. 27ECh. 1.2 - Prob. 28ECh. 1.2 - Prob. 29ECh. 1.2 - Prob. 30ECh. 1.2 - Prob. 31ECh. 1.2 - Prob. 32ECh. 1.2 - Prob. 33ECh. 1.2 - Prob. 34ECh. 1.2 - Prob. 35ECh. 1.2 - Prob. 36ECh. 1.2 - Prob. 37ECh. 1.2 - Prob. 38ECh. 1.2 - Prob. 39ECh. 1.2 - Prob. 40ECh. 1.2 - Prob. 41ECh. 1.2 - Prob. 42ECh. 1.2 - Prob. 43ECh. 1.2 - Prob. 44ECh. 1.2 - Prob. 45ECh. 1.2 - Prob. 46ECh. 1.2 - Prob. 47ECh. 1.2 - Prob. 48ECh. 1.2 - Prob. 49ECh. 1.2 - Prob. 50ECh. 1.2 - Prob. 51ECh. 1.2 - Prob. 52ECh. 1.2 - Prob. 53ECh. 1.2 - Prob. 54ECh. 1.2 - Prob. 55ECh. 1.2 - Prob. 56ECh. 1.2 - Prob. 57ECh. 1.2 - Prob. 58ECh. 1.3 - Prob. 1LCCh. 1.3 - Prob. 2LCCh. 1.3 - Prob. 1ECh. 1.3 - Prob. 2ECh. 1.3 - Prob. 3ECh. 1.3 - Prob. 4ECh. 1.3 - Prob. 5ECh. 1.3 - Prob. 6ECh. 1.3 - Prob. 7ECh. 1.3 - Prob. 8ECh. 1.3 - Prob. 9ECh. 1.3 - Prob. 10ECh. 1.3 - Prob. 11ECh. 1.3 - Prob. 12ECh. 1.3 - Prob. 13ECh. 1.3 - Prob. 14ECh. 1.3 - Prob. 15ECh. 1.3 - Prob. 16ECh. 1.3 - Prob. 17ECh. 1.3 - Prob. 18ECh. 1.3 - Prob. 19ECh. 1.3 - Prob. 20ECh. 1.3 - Prob. 21ECh. 1.3 - Prob. 22ECh. 1.3 - Prob. 23ECh. 1.3 - Prob. 24ECh. 1.3 - Prob. 25ECh. 1.3 - Prob. 26ECh. 1.3 - Prob. 27ECh. 1.3 - Prob. 28ECh. 1.3 - Prob. 29ECh. 1.3 - Prob. 30ECh. 1.3 - Prob. 31ECh. 1.3 - Prob. 32ECh. 1.3 - Prob. 33ECh. 1.3 - Prob. 34ECh. 1.3 - Prob. 35ECh. 1.3 - Prob. 36ECh. 1.3 - Prob. 37ECh. 1.3 - Prob. 38ECh. 1.3 - Prob. 39ECh. 1.3 - Prob. 40ECh. 1.3 - Prob. 41ECh. 1.3 - Prob. 42ECh. 1.3 - Prob. 43ECh. 1.3 - Prob. 44ECh. 1.3 - Prob. 45ECh. 1.3 - Prob. 46ECh. 1.3 - Prob. 47ECh. 1.3 - Prob. 48ECh. 1.3 - Prob. 49ECh. 1.3 - Prob. 50ECh. 1.3 - Prob. 51ECh. 1.3 - Prob. 52ECh. 1.3 - Prob. 53ECh. 1.3 - Prob. 54ECh. 1.3 - Prob. 55ECh. 1.3 - Prob. 56ECh. 1.3 - Prob. 57ECh. 1.3 - Prob. 58ECh. 1.3 - Prob. 59ECh. 1.3 - Prob. 60ECh. 1.3 - Prob. 61ECh. 1.3 - Prob. 62ECh. 1.3 - Prob. 63ECh. 1.3 - Prob. 64ECh. 1.3 - Prob. 65ECh. 1.3 - Prob. 66ECh. 1.3 - Prob. 67ECh. 1.3 - Prob. 68ECh. 1.3 - Prob. 69ECh. 1.3 - Prob. 70ECh. 1.3 - BUS If you have 348 packages of Halloween candy to...Ch. 1 - Prob. 1RECh. 1 - Prob. 2RECh. 1 - Write as decimal numbers.
(a)
(b)
(c)
Ch. 1 - Which of these decimal numbers is smaller: 0.83 or...Ch. 1 - Which of these decimal numbers is larger: 4.783 or...Ch. 1 - Two measurements of an object are recorded. If the...Ch. 1 - Write these decimal numbers in order of size from...Ch. 1 - Two parts are machined from the same stock. They...Ch. 1 - The decimal equivalent of is 0.875. The decimal...Ch. 1 - The population of Canada in 2017 was 36,469,872....Ch. 1 - Round to the indicated place.
Nearest hundred:...Ch. 1 - Round to the indicated place.
Nearest ten:...Ch. 1 - Round $83.48 to the nearest dollar.
Ch. 1 - Round $0.096 to the nearest cent.
Ch. 1 - Add.
8 + 5 + 3 + 6 + 2 + 4
7 + 4 + 3 + 2 + 5 + 4
Ch. 1 - Add.
6.2 + 32.7 + 46.82 + 0.29 + 4.237
86.3 +...Ch. 1 - An air conditioner uses 10.4 kW (kilowatts), a...Ch. 1 - A do-it-yourself project requires $57.32 for...Ch. 1 - Subtract: 28 − 13 − 5.
Ch. 1 - Subtract: 31 − 18 − 9.
Ch. 1 - Subtract.
(a) 21.34 − 16.73
(b) 15.934 −...Ch. 1 - Estimate by rounding to hundreds, then find the...Ch. 1 - For a moving sale, a family sold a sofa for $75...Ch. 1 - Subtract: 8 − 3.78.
Ch. 1 - Subtract: 143 − 78.2.
Ch. 1 - Prob. 26RECh. 1 - Find the length of A if D = 4.237 in., B = 1.861...Ch. 1 - Prob. 28RECh. 1 - Prob. 29RECh. 1 - Prob. 30RECh. 1 - Prob. 31RECh. 1 - Prob. 32RECh. 1 - Prob. 33RECh. 1 - Prob. 34RECh. 1 - Prob. 35RECh. 1 - Prob. 36RECh. 1 - Prob. 37RECh. 1 - Prob. 38RECh. 1 - Prob. 39RECh. 1 - Prob. 40RECh. 1 - A worker is offered a job that pays $365 per week....Ch. 1 - Prob. 42RECh. 1 - Prob. 43RECh. 1 - Prob. 44RECh. 1 - Prob. 45RECh. 1 - Prob. 46RECh. 1 - Prob. 47RECh. 1 - Prob. 48RECh. 1 - Prob. 49RECh. 1 - Prob. 50RECh. 1 - Prob. 51RECh. 1 - Prob. 52RECh. 1 - Prob. 53RECh. 1 - Prob. 54RECh. 1 - Prob. 55RECh. 1 - Prob. 56RECh. 1 - Prob. 57RECh. 1 - Prob. 58RECh. 1 - Prob. 59RECh. 1 - Prob. 60RECh. 1 - Prob. 61RECh. 1 - Prob. 62RECh. 1 - Prob. 63RECh. 1 - Prob. 64RECh. 1 - Prob. 65RECh. 1 - Prob. 66RECh. 1 - Prob. 67RECh. 1 - Prob. 68RECh. 1 - Prob. 69RECh. 1 - Prob. 70RECh. 1 - Prob. 71RECh. 1 - Prob. 72RECh. 1 - Prob. 73RECh. 1 - Prob. 74RECh. 1 - Prob. 75RECh. 1 - Prob. 76RECh. 1 - Prob. 77RECh. 1 - Prob. 78RECh. 1 - Prob. 79RECh. 1 - Prob. 80RECh. 1 - Prob. 81RECh. 1 - Prob. 82RECh. 1 - Prob. 83RECh. 1 - Prob. 84RECh. 1 - Prob. 85RECh. 1 - Prob. 86RECh. 1 - Prob. 87RECh. 1 - Prob. 88RECh. 1 - Prob. 89RECh. 1 - Prob. 90RECh. 1 - Prob. 91RECh. 1 - Prob. 92RECh. 1 - Prob. 93RECh. 1 - Prob. 94RECh. 1 - Prob. 95RECh. 1 - Prob. 96RECh. 1 - Prob. 97RECh. 1 - Prob. 98RECh. 1 - Prob. 99RECh. 1 - Prob. 100RECh. 1 - Prob. 101RECh. 1 - Prob. 102RECh. 1 - Prob. 103RECh. 1 - Prob. 104RECh. 1 - Prob. 105RECh. 1 - Prob. 106RECh. 1 - Prob. 107RECh. 1 - Prob. 108RECh. 1 - Prob. 109RECh. 1 - Prob. 110RECh. 1 - Prob. 111RECh. 1 - Prob. 112RECh. 1 - Prob. 113RECh. 1 - Prob. 114RECh. 1 - Prob. 115RECh. 1 - Prob. 116RECh. 1 - Prob. 117RECh. 1 - Prob. 118RECh. 1 - Prob. 119RECh. 1 - Prob. 120RECh. 1 - Prob. 121RECh. 1 - Prob. 122RECh. 1 - Prob. 123RECh. 1 - Prob. 124RECh. 1 - Prob. 125RECh. 1 - Prob. 1CACh. 1 - Prob. 2CACh. 1 - Prob. 3CACh. 1 - Prob. 4CACh. 1 - Prob. 5CACh. 1 - Prob. 6CACh. 1 - Prob. 7CACh. 1 - Find and explain the mistake, then rework each...Ch. 1 - Prob. 9CACh. 1 - Prob. 10CACh. 1 - Prob. 11CACh. 1 - Prob. 12CACh. 1 - Prob. 13CACh. 1 - Prob. 1PTCh. 1 - Prob. 2PTCh. 1 - Prob. 3PTCh. 1 - Prob. 4PTCh. 1 - Prob. 5PTCh. 1 - Prob. 6PTCh. 1 - Prob. 7PTCh. 1 - Prob. 8PTCh. 1 - Prob. 9PTCh. 1 - Prob. 10PTCh. 1 - Prob. 11PTCh. 1 - Prob. 12PTCh. 1 - Prob. 13PTCh. 1 - Prob. 14PTCh. 1 - Prob. 15PTCh. 1 - Prob. 16PTCh. 1 - Prob. 17PTCh. 1 - Prob. 18PTCh. 1 - Prob. 19PTCh. 1 - Prob. 20PTCh. 1 - Prob. 21PTCh. 1 - Prob. 22PTCh. 1 - Prob. 23PTCh. 1 - Prob. 24PTCh. 1 - Prob. 25PTCh. 1 - Prob. 26PTCh. 1 - Prob. 27PTCh. 1 - Prob. 28PTCh. 1 - Prob. 29PTCh. 1 - Prob. 30PT
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- The Course Name Real Analysis please Solve questions by Real Analysisarrow_forwardWe consider a 4-dimensional stock price model given (under P) by dẴ₁ = µ· Xt dt + йt · ΣdŴt where (W) is an n-dimensional Brownian motion, π = (0.02, 0.01, -0.02, 0.05), 0.2 0 0 0 0.3 0.4 0 0 Σ= -0.1 -4a За 0 0.2 0.4 -0.1 0.2) and a E R. We assume that ☑0 = (1, 1, 1, 1) and that the interest rate on the market is r = 0.02. (a) Give a condition on a that would make stock #3 be the one with largest volatility. (b) Find the diversification coefficient for this portfolio as a function of a. (c) Determine the maximum diversification coefficient d that you could reach by varying the value of a? 2arrow_forwardQuestion 1. Your manager asks you to explain why the Black-Scholes model may be inappro- priate for pricing options in practice. Give one reason that would substantiate this claim? Question 2. We consider stock #1 and stock #2 in the model of Problem 2. Your manager asks you to pick only one of them to invest in based on the model provided. Which one do you choose and why ? Question 3. Let (St) to be an asset modeled by the Black-Scholes SDE. Let Ft be the price at time t of a European put with maturity T and strike price K. Then, the discounted option price process (ert Ft) t20 is a martingale. True or False? (Explain your answer.) Question 4. You are considering pricing an American put option using a Black-Scholes model for the underlying stock. An explicit formula for the price doesn't exist. In just a few words (no more than 2 sentences), explain how you would proceed to price it. Question 5. We model a short rate with a Ho-Lee model drt = ln(1+t) dt +2dWt. Then the interest rate…arrow_forward
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