Mathematical Excursions (MindTap Course List)
4th Edition
ISBN: 9781305965584
Author: Richard N. Aufmann, Joanne Lockwood, Richard D. Nation, Daniel K. Clegg
Publisher: Cengage Learning
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Chapter 12, Problem 10T
To determine
No of odds in favour of the coins showing all odds.
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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 12 Solutions
Mathematical Excursions (MindTap Course List)
Ch. 12.1 - In a stack of 12 identical-looking coins, one is...Ch. 12.1 - In a stack of 13 identical-looking coins, one is...Ch. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the elements of the sample space defined by...
Ch. 12.1 - Prob. 9ESCh. 12.1 - List the elements of the sample space defined by...Ch. 12.1 - List the sample space of paths that start at A and...Ch. 12.1 - Prob. 12ESCh. 12.1 - Use the counting principle to determine the number...Ch. 12.1 - Use the counting principle to determine the number...Ch. 12.1 - Use the counting principle to determine the number...Ch. 12.1 - Use the counting principle to determine the number...Ch. 12.1 - Prob. 17ESCh. 12.1 - Prob. 18ESCh. 12.1 - Use the following experiment. Two digit numbers...Ch. 12.1 - Prob. 20ESCh. 12.1 - Use the following experiment. Two digit numbers...Ch. 12.1 - Prob. 22ESCh. 12.1 - Prob. 23ESCh. 12.1 - Use the following experiment. Two digit numbers...Ch. 12.1 - Prob. 25ESCh. 12.1 - Use the following experiment. Four cards labeled...Ch. 12.1 - Prob. 27ESCh. 12.1 - Use the following experiment. Four cards labeled...Ch. 12.1 - Prob. 29ESCh. 12.1 - Use the following experiment. A state lottery game...Ch. 12.1 - Use the following experiment. A state lottery game...Ch. 12.1 - Use the following experiment. A state lottery game...Ch. 12.1 - Prob. 33ESCh. 12.1 - Prob. 34ESCh. 12.1 - Prob. 35ESCh. 12.1 - Prob. 36ESCh. 12.2 - For each of the following exercises, assume that a...Ch. 12.2 - For each of the following exercises., assume that...Ch. 12.2 - For each of the following exercises, assume that a...Ch. 12.2 - For each of the following exercises, assume that a...Ch. 12.2 - For each of the following exercises, assume that a...Ch. 12.2 - Prob. 1ESCh. 12.2 - Prob. 2ESCh. 12.2 - Prob. 3ESCh. 12.2 - Prob. 4ESCh. 12.2 - Evaluate the expression. (83)!Ch. 12.2 - Prob. 6ESCh. 12.2 - Evaluate the expression. P(8,5)Ch. 12.2 - Evaluate the expression. P(7,2)Ch. 12.2 - Evaluate the expression. P(9,7)Ch. 12.2 - Prob. 10ESCh. 12.2 - Evaluate the expression. P(8,0)Ch. 12.2 - Evaluate the expression. P(7,0)Ch. 12.2 - Evaluate the expression. P(8,8)Ch. 12.2 - Prob. 14ESCh. 12.2 - Evaluate the expression. P(8,2)P(5,3)Ch. 12.2 - Prob. 16ESCh. 12.2 - Evaluate the expression. P(6,0)P(6,6)Ch. 12.2 - P(10,4)P(8,4) Evaluate the expression....Ch. 12.2 - Evaluate the expression. C(9,2)Ch. 12.2 - Prob. 20ESCh. 12.2 - Evaluate the expression. C(12,0)Ch. 12.2 - Prob. 22ESCh. 12.2 - Prob. 23ESCh. 12.2 - Evaluate the expression. C(8,5)C(9,4)Ch. 12.2 - Prob. 25ESCh. 12.2 - Evaluate the expression. C(4,3)C(5,2)C(9,5)Ch. 12.2 - Prob. 27ESCh. 12.2 - Prob. 28ESCh. 12.2 - Prob. 29ESCh. 12.2 - Evaluate the expression. 5!C(18,0)Ch. 12.2 - How many combinations are possible? Assume that...Ch. 12.2 - How many combinations are possible? Assume that...Ch. 12.2 - How many combinations are possible? Assume that...Ch. 12.2 - Prob. 34ESCh. 12.2 - Is it possible to calculate C(7,9)? Think of your...Ch. 12.2 - Prob. 36ESCh. 12.2 - Music Downloads A student downloaded 5 music tiles...Ch. 12.2 - Elections The board of directors of a corporation...Ch. 12.2 - Elections A committee of 16 students must select a...Ch. 12.2 - The Olympics A gold, a silver, and a bronze medal...Ch. 12.2 - Music Festival Six country music bands and 3 rock...Ch. 12.2 - Prob. 42ESCh. 12.2 - Passwords A password require 8 characters. If a...Ch. 12.2 - Gardening A gardener is planting a row of tulip...Ch. 12.2 - Prob. 45ESCh. 12.2 - Platoons A typical platoon consists of 20...Ch. 12.2 - Exam Questions A professor gives his students 7...Ch. 12.2 - Test Banks A math quiz is generated by randomly...Ch. 12.2 - Committee Selection A committee of 6 people is...Ch. 12.2 - Quality Control In a shipment of 20 smart phones,...Ch. 12.2 - Prob. 51ESCh. 12.2 - Basketball In the Eastern Conference of the...Ch. 12.2 - Prob. 53ESCh. 12.2 - Prob. 54ESCh. 12.2 - Softball Eighteen people decide to play softball....Ch. 12.2 - Bowling Fifteen people decide to form a bowling...Ch. 12.2 - Signal Flags The Coast Guard uses signal flags as...Ch. 12.2 - Pizza Toppings A restaurant offers a special pizza...Ch. 12.2 - Letter Arrangements How many different letter...Ch. 12.2 - Prob. 60ESCh. 12.2 - Coin Tosses Ten identical coins are tossed. How...Ch. 12.2 - Coin Tosses Twelve identical coins are tossed. How...Ch. 12.2 - Prob. 63ESCh. 12.2 - Prob. 64ESCh. 12.2 - Refer to a standard deck of playing cards. Assume...Ch. 12.2 - Prob. 66ESCh. 12.2 - Refer to a standard deck of playing cards. Assume...Ch. 12.2 - Prob. 68ESCh. 12.2 - Prob. 69ESCh. 12.2 - Refer to a standard deck of playing cards. Assume...Ch. 12.2 - Prob. 71ESCh. 12.2 - Prob. 72ESCh. 12.2 - Prob. 73ESCh. 12.3 - Using the recorded data, calculate the empirical...Ch. 12.3 - The theoretical probability that a toothpick will...Ch. 12.3 - Prob. 3EECh. 12.3 - Prob. 4EECh. 12.3 - Prob. 5EECh. 12.3 - Prob. 6EECh. 12.3 - List the elements of the sample space for each...Ch. 12.3 - Prob. 2ESCh. 12.3 - List the elements of the sample space for each...Ch. 12.3 - List the elements of the sample space for each...Ch. 12.3 - List the elements of the sample space for each...Ch. 12.3 - List the elements of the sample space for each...Ch. 12.3 - Assume that it is equally likely for a child to be...Ch. 12.3 - Assume that it is equally likely for a child to be...Ch. 12.3 - Assume that it is equally likely for a child to be...Ch. 12.3 - Prob. 10ESCh. 12.3 - Assume that it is equally likely for a child to be...Ch. 12.3 - Assume that it is equally likely for a child to be...Ch. 12.3 - Assume that it is equally likely for a child to be...Ch. 12.3 - Prob. 14ESCh. 12.3 - Assume that it is equally likely for a child to be...Ch. 12.3 - Prob. 16ESCh. 12.3 - A coin is tossed 4 times. Assuming the coin is...Ch. 12.3 - A coin is tossed 4 times. Assuming the coin is...Ch. 12.3 - In Exercises 19 to 22, a dodecahedral die (one...Ch. 12.3 - In Exercises 19 to 22, a dodecahedral die (one...Ch. 12.3 - In Exercises 19 to 22, a dodecahedral die (one...Ch. 12.3 - Prob. 22ESCh. 12.3 - In Exercises 23 to 32, 2 regular 6-sided dice are...Ch. 12.3 - Prob. 24ESCh. 12.3 - In Exercises 23 to 32, 2 regular 6-sided dice are...Ch. 12.3 - Prob. 26ESCh. 12.3 - In Exercises 23 to 32, 2 regular 6-sided dice are...Ch. 12.3 - Prob. 28ESCh. 12.3 - In Exercises 23 to 32, 2 regular 6-sided dice are...Ch. 12.3 - In Exercises 23 to 32, 2 regular 6-sided dice are...Ch. 12.3 - In Exercises 23 to 32, 2 regular 6-sided dice are...Ch. 12.3 - Prob. 32ESCh. 12.3 - If 2 dice are rolled, compute the probability of...Ch. 12.3 - Prob. 34ESCh. 12.3 - In Exercises 35 to 38. a card is selected at...Ch. 12.3 - Prob. 36ESCh. 12.3 - In Exercises 35 to 38. a card is selected at...Ch. 12.3 - Prob. 38ESCh. 12.3 - Voter Characteristics In Exercises 39 to 44, use...Ch. 12.3 - Prob. 40ESCh. 12.3 - Voter Characteristics In Exercises 39 to 44, use...Ch. 12.3 - Voter Characteristics In Exercises 39 to 44, use...Ch. 12.3 - Voter Characteristics In Exercises 39 to 44, use...Ch. 12.3 - Prob. 44ESCh. 12.3 - Education Levels In Exercises 45 to 48, a survey...Ch. 12.3 - Education Levels In Exercises 45 to 48, a survey...Ch. 12.3 - Education Levels In Exercises 45 to 48, a survey...Ch. 12.3 - Education Levels In Exercises 45 to 48, a survey...Ch. 12.3 - Annual Salaries A random survey asked respondents...Ch. 12.3 - Prob. 50ESCh. 12.3 - Annual Salaries A random survey asked respondents...Ch. 12.3 - Prob. 52ESCh. 12.3 - Prob. 53ESCh. 12.3 - Prob. 54ESCh. 12.3 - Genotypes The eye color of mice is determined by a...Ch. 12.3 - Genotypes The height of a certain plant is...Ch. 12.3 - Prob. 57ESCh. 12.3 - Prob. 58ESCh. 12.3 - The odds in favor of an event are given. Compute...Ch. 12.3 - Prob. 60ESCh. 12.3 - The odds in favor of an event are given. Compute...Ch. 12.3 - Prob. 62ESCh. 12.3 - The odds in favor of an event are given. Compute...Ch. 12.3 - Prob. 64ESCh. 12.3 - The probability of an event is given. Find the...Ch. 12.3 - Prob. 66ESCh. 12.3 - Prob. 67ESCh. 12.3 - Prob. 68ESCh. 12.3 - The probability of an event is given. Find the...Ch. 12.3 - Prob. 70ESCh. 12.3 - Game Shows The game board for the television show...Ch. 12.3 - Prob. 72ESCh. 12.3 - If a single fair die is rolled, what are the odds...Ch. 12.3 - Prob. 74ESCh. 12.3 - A coin is tossed 4 limes. What are the odds...Ch. 12.3 - Prob. 76ESCh. 12.3 - Use the table, which is based on information from...Ch. 12.3 - Prob. 78ESCh. 12.3 - Football A bookmaker has placed 8 to 3 odds...Ch. 12.3 - Candy Colors A snack-size bag of M&Ms candies...Ch. 12.3 - If 4 cards labeled A, B, C, and D are randomly...Ch. 12.3 - Prob. 82ESCh. 12.3 - Prob. 83ESCh. 12.3 - Prob. 84ESCh. 12.3 - Prob. 85ESCh. 12.3 - Prob. 86ESCh. 12.3 - Prob. 87ESCh. 12.3 - Prob. 88ESCh. 12.3 - Roulette Exercises 86(091 use the casino game...Ch. 12.3 - Prob. 90ESCh. 12.3 - Prob. 91ESCh. 12.4 - Prob. 1EECh. 12.4 - Prob. 2EECh. 12.4 - Prob. 3EECh. 12.4 - Prob. 4EECh. 12.4 - Some casinos will let you choose up to 20 numbers....Ch. 12.4 - If 20 numbers are chosen, find the probability of...Ch. 12.4 - Prob. 1ESCh. 12.4 - Prob. 2ESCh. 12.4 - In Exercises 3 to 6, first verify that the...Ch. 12.4 - Prob. 4ESCh. 12.4 - In Exercises 3 to 6, first verify that the...Ch. 12.4 - Prob. 6ESCh. 12.4 - If P(A)=0.2,P(B)=0.5, and P(AandB)=0.1. find...Ch. 12.4 - Prob. 8ESCh. 12.4 - If P(A)=0.3,P(B)=0.8, and P(AorB)=0.9. Find...Ch. 12.4 - Prob. 10ESCh. 12.4 - In Exercises 11 to 14, suppose you ask a friend to...Ch. 12.4 - Prob. 12ESCh. 12.4 - In Exercises 11 to 14, suppose you ask a friend to...Ch. 12.4 - Prob. 14ESCh. 12.4 - In Exercises 15 to 20, two dice are rolled....Ch. 12.4 - Prob. 16ESCh. 12.4 - In Exercises 15 to 20, two dice are rolled....Ch. 12.4 - Prob. 18ESCh. 12.4 - In Exercises 15 to 20, two dice are rolled....Ch. 12.4 - In Exercises 15 to 20, two dice are rolled....Ch. 12.4 - In Exercises 21 to 26, a single card is drawn from...Ch. 12.4 - Prob. 22ESCh. 12.4 - In Exercises 2110 26. a single card is drawn from...Ch. 12.4 - Prob. 24ESCh. 12.4 - In Exercises 2110 26. a single card is drawn from...Ch. 12.4 - Prob. 26ESCh. 12.4 - Employment In Exercises 27 to 30, use the data in...Ch. 12.4 - Employment In Exercises 27 to 30, use the data in...Ch. 12.4 - Employment In Exercises 27 to 30, use the data in...Ch. 12.4 - Prob. 30ESCh. 12.4 - Contests If the probability of winning a...Ch. 12.4 - Prob. 32ESCh. 12.4 - Professional Sports The National Collegiate -...Ch. 12.4 - Prob. 34ESCh. 12.4 - Use the formula for the probability of the...Ch. 12.4 - Prob. 36ESCh. 12.4 - Use the formula for the probability of the...Ch. 12.4 - Prob. 38ESCh. 12.4 - Use the formula for the probability of the...Ch. 12.4 - Use the formula for the probability of the...Ch. 12.4 - Prob. 41ESCh. 12.4 - Prob. 42ESCh. 12.4 - Prob. 43ESCh. 12.4 - Prob. 44ESCh. 12.4 - Prob. 45ESCh. 12.4 - Prob. 46ESCh. 12.4 - Prob. 47ESCh. 12.4 - If a person draws 3 cards from a standard deck...Ch. 12.4 - Prob. 49ESCh. 12.4 - Prob. 50ESCh. 12.4 - Prob. 51ESCh. 12.4 - Coins A bag contains 44 U.S. quarters and 6...Ch. 12.4 - Prob. 53ESCh. 12.4 - Prob. 54ESCh. 12.4 - Door Codes A planned community has 300 homes, each...Ch. 12.4 - Monty Hall Problem When someone is first presented...Ch. 12.4 - Prob. 57ESCh. 12.4 - Prob. 58ESCh. 12.5 - Prob. 1EECh. 12.5 - Prob. 2EECh. 12.5 - Prob. 3EECh. 12.5 - Prob. 4EECh. 12.5 - Prob. 1ESCh. 12.5 - Prob. 2ESCh. 12.5 - In Exercises 3 to 6, compute the conditional...Ch. 12.5 - Prob. 4ESCh. 12.5 - In Exercises 3 to 6, compute the conditional...Ch. 12.5 - In Exercises 3 to 6, compute the conditional...Ch. 12.5 - Employment In Exercises 7 to 10, use the data in...Ch. 12.5 - Employment In Exercises 7 to 10, use the data in...Ch. 12.5 - Employment In Exercises 7 to 10, use the data in...Ch. 12.5 - Prob. 10ESCh. 12.5 - Video Games In Exercises 11 to 14, use the data in...Ch. 12.5 - Video Games In Exercises 11 to 14, use the data in...Ch. 12.5 - Video Games In Exercises 11 to 14, use the data in...Ch. 12.5 - Prob. 14ESCh. 12.5 - A pair of dice is tossed. Find the probability...Ch. 12.5 - Prob. 16ESCh. 12.5 - A pair of dice is tossed. What is the probability...Ch. 12.5 - Prob. 18ESCh. 12.5 - What is the probability of drawing 2 cards in...Ch. 12.5 - Prob. 20ESCh. 12.5 - Two cards are drawn from a standard deck without...Ch. 12.5 - Prob. 22ESCh. 12.5 - Candy Colors In Exercises 23 to 26, a snack-size...Ch. 12.5 - Prob. 24ESCh. 12.5 - Candy Colors In Exercises 23 to 26, a snack-size...Ch. 12.5 - Prob. 26ESCh. 12.5 - In Exercises 27 to 30, 3 cards are dealt from a...Ch. 12.5 - Prob. 28ESCh. 12.5 - In Exercises 27 to 30, 3 cards are dealt from a...Ch. 12.5 - Prob. 30ESCh. 12.5 - Student Attendance In Exercises 31 to 34, the...Ch. 12.5 - Prob. 32ESCh. 12.5 - Student Attendance In Exercises 31 to 34, the...Ch. 12.5 - Student Attendance In Exercises 31 to 34, the...Ch. 12.5 - Prob. 35ESCh. 12.5 - Prob. 36ESCh. 12.5 - Prob. 37ESCh. 12.5 - Prob. 38ESCh. 12.5 - Prob. 39ESCh. 12.5 - Prob. 40ESCh. 12.5 - Prob. 41ESCh. 12.5 - In Exercises 39 to 44, a pair of dice is tossed...Ch. 12.5 - Prob. 43ESCh. 12.5 - Prob. 44ESCh. 12.5 - Prob. 45ESCh. 12.5 - Prob. 46ESCh. 12.5 - Prob. 47ESCh. 12.5 - Prob. 48ESCh. 12.5 - Prob. 49ESCh. 12.5 - In Exercises 4910 54, a card is drawn from a...Ch. 12.5 - Prob. 51ESCh. 12.5 - Prob. 52ESCh. 12.5 - Prob. 53ESCh. 12.5 - Prob. 54ESCh. 12.5 - A standard deck of playing cards is shuffled, and...Ch. 12.5 - Prob. 56ESCh. 12.5 - A hag contains 5 red marbles, 4 green marbles, and...Ch. 12.5 - Prob. 58ESCh. 12.5 - Prob. 59ESCh. 12.5 - Prob. 60ESCh. 12.5 - Prob. 61ESCh. 12.5 - Prob. 62ESCh. 12.5 - Monty Hall Problem This is another explanation,...Ch. 12.6 - Compute the probability that if a bet is placed on...Ch. 12.6 - Prob. 2EECh. 12.6 - Prob. 3EECh. 12.6 - Prob. 4EECh. 12.6 - Prob. 5EECh. 12.6 - Determine the expectation for wagering $1 on the...Ch. 12.6 - Prob. 7EECh. 12.6 - Prob. 8EECh. 12.6 - Prob. 1ESCh. 12.6 - The outcomes of an experiment and the probability...Ch. 12.6 - Roulette One of the wagers in the game of roulette...Ch. 12.6 - Roulette One of the wagers in roulette is to bet...Ch. 12.6 - Casino Games Many casinos have a game called the...Ch. 12.6 - Casino Games Many casinos have a game called the...Ch. 12.6 - Casino Games Many casinos have a game called the...Ch. 12.6 - Casino Games Many casinos have a game called the...Ch. 12.6 - Life Insurance Exercises 9 to 14 use data taken...Ch. 12.6 - Life Insurance Exercises 9 to 14 use data taken...Ch. 12.6 - Prob. 11ESCh. 12.6 - Prob. 12ESCh. 12.6 - Prob. 13ESCh. 12.6 - Prob. 14ESCh. 12.6 - Construction A construction company has been hired...Ch. 12.6 - Prob. 16ESCh. 12.6 - Design Consultant A consultant has been hired to...Ch. 12.6 - Prob. 18ESCh. 12.6 - If a pair of regular dice is tossed once, use the...Ch. 12.6 - Consider rolling a pair of unusual dice, for which...Ch. 12.6 - Prob. 21ESCh. 12.6 - Suppose you purchase a ticket for a prize and your...Ch. 12.6 - Prob. 23ESCh. 12.6 - Prob. 24ESCh. 12 - List the elements of the sample space for the...Ch. 12 - Prob. 2RECh. 12 - Prob. 3RECh. 12 - Prob. 4RECh. 12 - An athletic shoe store sells running shoes in 3...Ch. 12 - Prob. 6RECh. 12 - Prob. 7RECh. 12 - Prob. 8RECh. 12 - Prob. 9RECh. 12 - Prob. 10RECh. 12 - Prob. 11RECh. 12 - Prob. 12RECh. 12 - Prob. 13RECh. 12 - Prob. 14RECh. 12 - Prob. 15RECh. 12 - A matching test has 7 definitions that are to be...Ch. 12 - A matching test has 7 definitions to be matched...Ch. 12 - Prob. 18RECh. 12 - Twelve identical coins are tossed. How many...Ch. 12 - Work Shifts Three positions are open at a...Ch. 12 - A professor assigns 25 homework problems, of which...Ch. 12 - Prob. 22RECh. 12 - Quality Control A quality control inspector...Ch. 12 - Prob. 24RECh. 12 - 25. How many 5-card poker hands consist of 4 of a...Ch. 12 - Prob. 26RECh. 12 - Prob. 27RECh. 12 - Prob. 28RECh. 12 - Use the table below, which shows the number of...Ch. 12 - Use the table below, which shows the number of...Ch. 12 - Prob. 31RECh. 12 - Prob. 32RECh. 12 - Prob. 33RECh. 12 - Prob. 34RECh. 12 - Prob. 35RECh. 12 - Prob. 36RECh. 12 - Prob. 37RECh. 12 - Prob. 38RECh. 12 - Prob. 39RECh. 12 - Prob. 40RECh. 12 - Prob. 41RECh. 12 - Prob. 42RECh. 12 - Prob. 43RECh. 12 - Prob. 44RECh. 12 - Two cards are drawn, without replacement, from a...Ch. 12 - Prob. 46RECh. 12 - A box contains 24 different colored chips that are...Ch. 12 - Prob. 48RECh. 12 - A box contains 24 different colored chips that are...Ch. 12 - Prob. 50RECh. 12 - A box contains 24 different colored chips that are...Ch. 12 - Prob. 52RECh. 12 - Use the table below, which shows the number of...Ch. 12 - Use the table below, which shows the number of...Ch. 12 - Use the table below, which shows the number of...Ch. 12 - Prob. 56RECh. 12 - Prob. 57RECh. 12 - Prob. 58RECh. 12 - Prob. 59RECh. 12 - Prob. 60RECh. 12 - Prob. 61RECh. 12 - Prob. 62RECh. 12 - Prob. 63RECh. 12 - Prob. 64RECh. 12 - 1 will flip 2 coins. If both coins come up tails,...Ch. 12 - Raffle Tickets For a fundraiser, an elementary...Ch. 12 - Prob. 67RECh. 12 - Prob. 68RECh. 12 - Life Insurance The probability that a 19-year-old...Ch. 12 - Construction A construction company has bid on a...Ch. 12 - Prob. 1TCh. 12 - Computer Systems A computer system can be...Ch. 12 - Prob. 3TCh. 12 - Prob. 4TCh. 12 - Prob. 5TCh. 12 - Prob. 6TCh. 12 - Prob. 7TCh. 12 - Prob. 8TCh. 12 - Prob. 9TCh. 12 - Prob. 10TCh. 12 - Prob. 11TCh. 12 - Prob. 12TCh. 12 - Prob. 13TCh. 12 - Prob. 14T
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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
- 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.)arrow_forward3. Consider the polynomial equation 6-iz+7z² - iz³ +z = 0 for which the roots are 3i, -2i, -i, and i. (a) Verify the relations between this roots and the coefficients of the polynomial. (b) Find the annulus region in which the roots lie.arrow_forwardThe managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c. Question content area bottom Part 1 a. Develop a simple linear regression model between billable hours and overhead costs. Overhead Costsequals=212495.2212495.2plus+left parenthesis 42.4857 right parenthesis42.485742.4857times×Billable Hours (Round the constant to one decimal place as needed. Round the coefficient to four decimal places as needed. Do not include the $ symbol in your answers.) Part 2 b. Interpret the coefficients of your regression model. Specifically, what does the fixed component of the model mean to the consulting firm? Interpret the fixed term, b 0b0, if appropriate. Choose the correct answer below. A. The value of b 0b0 is the predicted billable hours for an overhead cost of 0 dollars. B. It is not appropriate to interpret b 0b0, because its value…arrow_forward
- 3. Consider the polynomial equation 6-iz+7z2-iz³ +z = 0 for which the roots are 3i, -2i, -i, and i. (a) Verify the relations between this roots and the coefficients of the polynomial. (b) Find the annulus region in which the roots lie.arrow_forwardWrite the equation of the trigonometric function shown in the graph. LO 5 4 3 2 1 y -5 -5 4 8 8 500 -1 -2 -3 -4 -5 x 5 15л 5л 25л 15л 35π 5л 4 8 2 8 4 8arrow_forwardc) Using only Laplace transforms solve the following Samuelson model given below i.e., the second order difference equation (where yt is national income): - Yt+2 6yt+1+5y₁ = 0, if y₁ = 0 for t < 0, and y₁ = 0, y₁ = 1 1-e-s You may use without proof that L-1[s(1-re-s)] = f(t) = r² for n ≤tarrow_forward5. 156 m/WXY = 59° 63 E 7. B E 101 C mFE = 6. 68° 8. C 17arrow_forwardScoring: MATH 15 FILING /10 COMPARISON /10 RULER I 13 Express EMPLOYMENT PROFESSIONALS NAME: SKILLS EVALUATION TEST- Light Industrial MATH-Solve the following problems. (Feel free to use a calculator.) DATE: 1. If you were asked to load 225 boxes onto a truck, and the boxes are crated, with each crate containing nine boxes, how many crates would you need to load? 2. Imagine you live only one mile from work and you decide to walk. If you walk four miles per hour, how long will it take you to walk one mile? 3. Add 3 feet 6 inches + 8 feet 2 inches + 4 inches + 2 feet 5 inches. 4. In a grocery store, steak costs $3.85 per pound. If you buy a three-pound steak and pay for it with a $20 bill, how much change will you get? 5. Add 8 minutes 32 seconds + 37 minutes 18 seconds + 15 seconds. FILING - In the space provided, write the number of the file cabinet where the company should be filed. Example: File Cabinet #4 Elson Co. File Cabinets: 1. Aa-Bb 3. Cg-Dz 5. Ga-Hz 7. La-Md 9. Na-Oz 2. Bc-Cf…arrow_forwardpart 3 of the question is: A power outage occurs 6 min after the ride started. Passengers must wait for their cage to be manually cranked into the lowest position in order to exit the ride. Sine function model: where h is the height of the last passenger above the ground measured in feet and t is the time of operation of the ride in minutes. What is the height of the last passenger at the moment of the power outage? Verify your answer by evaluating the sine function model. Will the last passenger to board the ride need to wait in order to exit the ride? Explain.arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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