Using & Understanding Mathematics: A Quantitative Reasoning Approach (7th Edition)
7th Edition
ISBN: 9780134715919
Author: Bennett
Publisher: PEARSON
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Chapter 10.B, Problem 65E
To determine
To determine:
The unknown lengths of sides in the given pair of similar triangles.
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4. Assume that a risk-free money market account is added to the market described in Q3.
The continuously compounded rate of return on the money market account is log (1.1).
(i) For each given μ, use Lagrange multipliers to determine the proportions (as a
function of μ) of wealth invested in the three assets available for the minimum
variance portfolio with expected return μ.
(ii) Determine the market portfolio in this market and calculate its Sharp ratio.
3. A market consists of two risky assets with rates of return R₁ and R2 and no risk-free
asset. From market data the following have been estimated: ER₁ = 0.25, ER2 = 0.05,
Var R₁ = 0.01, Var R2 = 0.04 and the correlation between R1 and R2 is p = -0.75.
(i) Given that an investor is targeting a total expected return of μ = 0.2. What
portfolio weights should they choose to meet this goal with minimum portfolio
variance? Correct all your calculations up to 4 decimal points.
(ii) Determine the global minimum-variance portfolio and the expected return and
variance of return of this portfolio (4 d.p.).
(iii) Sketch the minimum-variance frontier in the μ-σ² plane and indicate the efficient
frontier.
(iv) Without further calculation, explain how the minimum variance of the investor's
portfolio return will change if the two risky assets were independent.
2. A landlord is about to write a rental contract for a tenant which lasts T months. The
landlord first decides the length T > 0 (need not be an integer) of the contract, the
tenant then signs it and pays an initial handling fee of £100 before moving in. The
landlord collects the total amount of rent erT at the end of the contract at a continuously
compounded rate r> 0, but the contract stipulates that the tenant may leave before T,
in which case the landlord only collects the total rent up until the tenant's departure
time 7. Assume that 7 is exponentially distributed with rate > 0, λ‡r.
(i) Calculate the expected total payment EW the landlord will receive in terms of T.
(ii) Assume that the landlord has logarithmic utility U(w) = log(w - 100) and decides
that the rental rate r should depend on the contract length T by
r(T)
=
λ
√T
1
For each given λ, what T (as a function of X) should the landlord choose so as to
maximise their expected utility? Justify your answer.
Hint. It might be…
Chapter 10 Solutions
Using & Understanding Mathematics: A Quantitative Reasoning Approach (7th Edition)
Ch. 10.A - Prob. 1QQCh. 10.A - Prob. 2QQCh. 10.A - An acute angle is a. less than 90°. b. exactly...Ch. 10.A - 4. A regular polygon always has
a. four sides. b....Ch. 10.A - 5. A right triangle always has
three equal-length...Ch. 10.A - 6. The circumference of a circle of radius r...Ch. 10.A - The volume of a sphere of radius r is a. \[\pi...Ch. 10.A - Prob. 8QQCh. 10.A - If you triple the radius of a sphere, the volume...Ch. 10.A - Suppose you cut a large stone block into four...
Ch. 10.A - What do we mean by Euclidean geometry?Ch. 10.A - Prob. 2ECh. 10.A - What do we mean by dimension? How is dimension...Ch. 10.A - Prob. 4ECh. 10.A - What is plane geometry? What does it mean for...Ch. 10.A - 6. What is a polygon? How do we measure the...Ch. 10.A - What are the formulas for the circumference and...Ch. 10.A - 8. Describe how we calculate the volumes and...Ch. 10.A - What are the scaling laws for area and volume?...Ch. 10.A - Prob. 10ECh. 10.A - Prob. 11ECh. 10.A - Prob. 12ECh. 10.A - My bedroom is a rectangular prism that measures 12...Ch. 10.A - walked around the circular pond to a point on the...Ch. 10.A - Prob. 15ECh. 10.A - 16. By building a fence across my rectangular...Ch. 10.A - Prob. 17ECh. 10.A - Prob. 18ECh. 10.A - Angles and Circles. Find the degree measure of the...Ch. 10.A - 17-22: Angles and Circles. Find the degree measure...Ch. 10.A - 17-22: Angles and Circles. Find the degree measure...Ch. 10.A - 17-22: Angles and Circles. Find the degree measure...Ch. 10.A - Prob. 23ECh. 10.A - Prob. 24ECh. 10.A - Prob. 25ECh. 10.A - Prob. 26ECh. 10.A - Prob. 27ECh. 10.A - Prob. 28ECh. 10.A - Prob. 29ECh. 10.A - Prob. 30ECh. 10.A - Circle Practice. Find the circumference and area...Ch. 10.A - Prob. 32ECh. 10.A - Circle Practice. Find the circumference and area...Ch. 10.A - 31-36: Circle Practice. Find the circumference and...Ch. 10.A - Circle Practice. Find the circumference and area...Ch. 10.A - Prob. 36ECh. 10.A - Prob. 37ECh. 10.A - Prob. 38ECh. 10.A - Perimeters and Areas. Use Table 10.2 to find the...Ch. 10.A - Prob. 40ECh. 10.A - Prob. 41ECh. 10.A - Prob. 42ECh. 10.A - Triangle Geometry. Find the perimeter and area of...Ch. 10.A - Prob. 44ECh. 10.A - 43-46: Triangle Geometry. Find the perimeter and...Ch. 10.A - 43-46: Triangle Geometry. Find the perimeter and...Ch. 10.A - Window Space. A picture window has a length of 8...Ch. 10.A - A Running Track. A running track has straight legs...Ch. 10.A - Building Stairs. Refer to Figure 10.14, showing...Ch. 10.A - No Calculation Required. The end views of two...Ch. 10.A - Parking Lot. A parking lot is shaped like a...Ch. 10.A - Prob. 52ECh. 10.A - Prob. 53ECh. 10.A - 53-57: Three-Dimensional Objects. Use the formulas...Ch. 10.A - Three-Dimensional Objects. Use the formulas in...Ch. 10.A - Prob. 56ECh. 10.A - Prob. 57ECh. 10.A - 58. Water Canal. A water canal has a rectangular...Ch. 10.A - 59. Water Reservoir. The water reservoir for a...Ch. 10.A - 60. Oil Drums. Which holds more: an oil drum with...Ch. 10.A - Tree Volumes. Is there more wood in a 40-foot-high...Ch. 10.A - Architectural Model. Suppose you build an...Ch. 10.A - Architectural Model: Suppose you build an...Ch. 10.A - Prob. 64ECh. 10.A - Architectural Model: Suppose you build an...Ch. 10.A - Prob. 66ECh. 10.A - Architectural Model: Suppose you build an...Ch. 10.A - Prob. 68ECh. 10.A - Quadrupling Your Size. Suppose you magically...Ch. 10.A - Quadrupling Your Size. Suppose you magically...Ch. 10.A - Quadrupling Your Size. Suppose you magically...Ch. 10.A - 72-74: Comparing People. Consider a person named...Ch. 10.A - 72-74: Comparing People. Consider a person named...Ch. 10.A - Prob. 74ECh. 10.A - Squirrels or People? Squirrels and humans are both...Ch. 10.A - 75-76: Squirrels or People? Squirrels and humans...Ch. 10.A - Prob. 77ECh. 10.A - Prob. 78ECh. 10.A - Comparing Balls. Consider a softball with a radius...Ch. 10.A - Prob. 80ECh. 10.A - Dimension. Examine a closed book. How many...Ch. 10.A - Perpendicular and Parallel. Suppose you mark a...Ch. 10.A - Perpendicular and Parallel. Suppose you draw two...Ch. 10.A - Backyard. Figure 10.25 shows the layout of a...Ch. 10.A - Human Lung. The human lung has approximately 300...Ch. 10.A - 86. Automobile Engine Capacity. The size of a car...Ch. 10.A - 87. The Chunnel. The English Channel Tunnel, or...Ch. 10.A - Prob. 88ECh. 10.A - Prob. 89ECh. 10.A - Prob. 90ECh. 10.A - The Geometry of Ancient Cultures. Research the use...Ch. 10.A - Surveying and GIS. Surveying is one of the oldest...Ch. 10.A - Platonic Solids. Why are there five and only five...Ch. 10.B - The number of minutes of are in a full circle is...Ch. 10.B - Prob. 2QQCh. 10.B - If you travel due east, you are traveling along a...Ch. 10.B - 4. If you are located at latitude 30°S and...Ch. 10.B - What would be different about the Sun if you...Ch. 10.B - Prob. 6QQCh. 10.B - If you are bicycling eastward up a hill with a 10%...Ch. 10.B - Prob. 8QQCh. 10.B - Prob. 9QQCh. 10.B - Prob. 10QQCh. 10.B - How do we describe fractions of a degree of angle?Ch. 10.B - Prob. 2ECh. 10.B - How is angular size related to physical size?Ch. 10.B - Prob. 4ECh. 10.B - Give at least two examples of ways in which the...Ch. 10.B - Prob. 6ECh. 10.B - Give an example of a practical problem that can be...Ch. 10.B - 8. What is an optimization problem? Give an...Ch. 10.B - 9. In December, it is winter at 70oW and 44oS.
Ch. 10.B - Prob. 10ECh. 10.B - Prob. 11ECh. 10.B - Prob. 12ECh. 10.B - Prob. 13ECh. 10.B - Prob. 14ECh. 10.B - Angle Conversions I. Convert the given degree...Ch. 10.B - 15-20: Angle Conversions I. Convert the given...Ch. 10.B - Prob. 17ECh. 10.B - Prob. 18ECh. 10.B - Prob. 19ECh. 10.B - Angle Conversions I. Convert the given degree...Ch. 10.B - 21-26: Angle Conversions II. Convert the given...Ch. 10.B - 21-26: Angle Conversions II. Convert the given...Ch. 10.B - Prob. 23ECh. 10.B - Prob. 24ECh. 10.B - Angle Conversions II. Convert the given angle...Ch. 10.B - Prob. 26ECh. 10.B - Prob. 27ECh. 10.B - Prob. 28ECh. 10.B - Prob. 29ECh. 10.B - Prob. 30ECh. 10.B - Prob. 31ECh. 10.B - Prob. 32ECh. 10.B - Prob. 33ECh. 10.B - Prob. 34ECh. 10.B - Prob. 35ECh. 10.B - Prob. 36ECh. 10.B - Angular Size. Use the formula relating angular...Ch. 10.B - Angular Size. Use the formula relating angular...Ch. 10.B - Angular Size. Use the formula relating angular...Ch. 10.B - Prob. 40ECh. 10.B - Prob. 41ECh. 10.B - Prob. 42ECh. 10.B - Prob. 43ECh. 10.B - Prob. 44ECh. 10.B - Prob. 45ECh. 10.B - 46. Grade of a Road. How much does a road with a...Ch. 10.B - 47. Pitch of a Roof. What is the angle (relative...Ch. 10.B - Grade of a Path. What is the approximate grade...Ch. 10.B - Prob. 49ECh. 10.B - Grade of a Trail. How much does a trail with a 22%...Ch. 10.B - Map Distances. Refer to the map in Figure 10.37....Ch. 10.B - Prob. 52ECh. 10.B - Prob. 53ECh. 10.B - Prob. 54ECh. 10.B - Prob. 55ECh. 10.B - Map Distances. Refer to the map in Figure 10.37....Ch. 10.B - Prob. 57ECh. 10.B - Prob. 58ECh. 10.B - 57-60: Acreage Problems. Refer to Figure 10.31,...Ch. 10.B - Acreage Problems. Refer to Figure 10.31, but use...Ch. 10.B - 61-64: Determining Similarity. Determine which...Ch. 10.B - Prob. 62ECh. 10.B - Prob. 63ECh. 10.B - Prob. 64ECh. 10.B - Prob. 65ECh. 10.B - Analyzing Similar Triangles. Determine the lengths...Ch. 10.B - Analyzing Similar Triangles. Determine the lengths...Ch. 10.B - Prob. 68ECh. 10.B - Solar Access. Assume that the policy given In...Ch. 10.B - Solar Access. Assume that the policy given In...Ch. 10.B - Solar Access. Assume that the policy given in...Ch. 10.B - Solar Access. Assume that the policy given in...Ch. 10.B - Prob. 73ECh. 10.B - Prob. 74ECh. 10.B - Prob. 75ECh. 10.B - Prob. 76ECh. 10.B - Prob. 77ECh. 10.B - Designing Plastic Buckets. A company manufactures...Ch. 10.B - Designing Cardboard Boxes. Suppose you are...Ch. 10.B - Designing Steel Safes. A large steel sale with a...Ch. 10.B - Blu-ray Geometry. The capacity of a single-sided,...Ch. 10.B - Prob. 82ECh. 10.B - Prob. 83ECh. 10.B - Prob. 84ECh. 10.B - Prob. 85ECh. 10.B - Prob. 86ECh. 10.B - Prob. 87ECh. 10.B - Filling a Pool. A spherical water tank has a...Ch. 10.B - Prob. 89ECh. 10.B - Prob. 90ECh. 10.B - Prob. 91ECh. 10.B - 92. Estimating Heights. In trying in estimate the...Ch. 10.B - 93. Soda Can Design. Standard soft drink cans hold...Ch. 10.B - 94. Melting Ice. A glaciers surface is...Ch. 10.B - Prob. 95ECh. 10.B - Prob. 96ECh. 10.B - Prob. 97ECh. 10.B - Prob. 98ECh. 10.B - Prob. 99ECh. 10.B - Prob. 100ECh. 10.C - Fractal geometry is useful because it is the only...Ch. 10.C - Prob. 2QQCh. 10.C - Prob. 3QQCh. 10.C - Which of the following is a general characteristic...Ch. 10.C - How do fractal dimensions differ from in Euclidean...Ch. 10.C - 6. An island coastline has a fractal dimension...Ch. 10.C - Prob. 7QQCh. 10.C - Prob. 8QQCh. 10.C - Prob. 9QQCh. 10.C - Prob. 10QQCh. 10.C - Prob. 1ECh. 10.C - Prob. 2ECh. 10.C - Explain the meaning of the factors R and N used in...Ch. 10.C - What is the snowflake curve? Explain why we cannot...Ch. 10.C - Prob. 5ECh. 10.C - Prob. 6ECh. 10.C - Briefly describe what we mean by the process of...Ch. 10.C - 8. What is random iteration? Why do objects...Ch. 10.C - 9. I can use a yardstick to find the area of my...Ch. 10.C - I can use a yardstick to measure the length of the...Ch. 10.C - The area of the snowflake island is given by its...Ch. 10.C - Prob. 12ECh. 10.C - The edge of this leaf has a fractal dimension of...Ch. 10.C - This entire leaf, riddled with holes, has a...Ch. 10.C - Prob. 15ECh. 10.C - Prob. 16ECh. 10.C - Prob. 17ECh. 10.C - Prob. 18ECh. 10.C - Prob. 19ECh. 10.C - Prob. 20ECh. 10.C - 15-26: Ordinary and Fractal Dimensions. Find the...Ch. 10.C - 15-26: Ordinary and Fractal Dimensions. Find the...Ch. 10.C - 15-26: Ordinary and Fractal Dimensions. Find the...Ch. 10.C - Prob. 24ECh. 10.C - Prob. 25ECh. 10.C - Prob. 26ECh. 10.C - Prob. 27ECh. 10.C - Prob. 28ECh. 10.C - Prob. 29ECh. 10.C - Prob. 30ECh. 10.C - Prob. 31ECh. 10.C - Prob. 32ECh. 10.C - Prob. 33ECh. 10.C - Fractal Research. Locate at least two websites...Ch. 10.C - 35. Fractal Art. Visit a website that features...
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- Please solving problem2 Problem1 We consider a two-period binomial model with the following properties: each period lastsone (1) year and the current stock price is S0 = 4. On each period, the stock price doubleswhen it moves up and is reduced by half when it moves down. The annual interest rateon the money market is 25%. (This model is the same as in Prob. 1 of HW#2).We consider four options on this market: A European call option with maturity T = 2 years and strike price K = 5; A European put option with maturity T = 2 years and strike price K = 5; An American call option with maturity T = 2 years and strike price K = 5; An American put option with maturity T = 2 years and strike price K = 5.(a) Find the price at time 0 of both European options.(b) Find the price at time 0 of both American options. Compare your results with (a)and comment.(c) For each of the American options, describe the optimal exercising strategy.arrow_forwardPlease ensure that all parts of the question are answered thoroughly and clearly. Include a diagram to help explain answers. Make sure the explanation is easy to follow. Would appreciate work done written on paper. Thank you.arrow_forwardThis question builds on an earlier problem. The randomized numbers may have changed, but have your work for the previous problem available to help with this one. A 4-centimeter rod is attached at one end to a point A rotating counterclockwise on a wheel of radius 2 cm. The other end B is free to move back and forth along a horizontal bar that goes through the center of the wheel. At time t=0 the rod is situated as in the diagram at the left below. The wheel rotates counterclockwise at 1.5 rev/sec. At some point, the rod will be tangent to the circle as shown in the third picture. A B A B at some instant, the piston will be tangent to the circle (a) Express the x and y coordinates of point A as functions of t: x= 2 cos(3πt) and y= 2 sin(3t) (b) Write a formula for the slope of the tangent line to the circle at the point A at time t seconds: -cot(3πt) sin(3лt) (c) Express the x-coordinate of the right end of the rod at point B as a function of t: 2 cos(3πt) +411- 4 -2 sin (3лt) (d)…arrow_forward
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