Mathematics All Around (6th Edition)
6th Edition
ISBN: 9780134434681
Author: Tom Pirnot
Publisher: PEARSON
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Textbook Question
Chapter 14.4, Problem 31E
Use Table 14.19 to find the percent of the area under the standard normal curve that is specified.
Find a z-score such that 12% of the area under the standard normal curve is below that score.
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Students have asked these similar questions
We consider an N-period CRR model where each period is 1 year (At = 1), the up factor is
u = 0.1, the down factor is d = e−0.3 and r = 0. We remind you that in the CRR model, the
stock price at time tn is modeled (under P) by
Sta
=
So exp (μtn + σ√AtZn),
where (Zn) is a simple symmetric random walk.
(a) Find the parameters μ and σ for the CRR model described above.
(b) Find P
Ste
So
55/50
€ > 1).
StN
(c) Find lim P
804-N
(d) Determine q. (You can use e- 1 x.)
Ste
(e) Find Q
So
(f) Find lim Q
004-N
StN
So
In this problem, we consider a 3-period stock market model with evolution given in Fig. 1 below.
Each period corresponds to one year. The interest rate is r = 0%.
16
22
28
12
16
12
8
4
2
time
Figure 1: Stock evolution for Problem 1.
(a) A colleague notices that in the model above, a movement up-down leads to the same value
as a movement down-up. He concludes that the model is a CRR model. Is your colleague
correct? (Explain your answer.)
(b) We consider a European put with strike price K = 10 and expiration T = 3 years. Find
the price of this option at time 0. Provide the replicating portfolio for the first period.
(c) In addition to the call above, we also consider a European call with strike price K = 10
and expiration T = 3 years. Which one has the highest price? (It is not necessary to
provide the price of the call.)
(d) We now assume a yearly interest rate r = 25%. We consider a Bermudan put option with
strike price K = 10. It works like a standard put, but you can exercise it…
In this problem, we consider a 2-period stock market model with evolution given in Fig. 1 below.
Each period corresponds to one year (At = 1). The yearly interest rate is r = 1/3 = 33%. This
model is a CRR model.
25
15
9
10
6
4
time
Figure 1: Stock evolution for Problem 1.
(a) Find the values of up and down factors u and d, and the risk-neutral probability q.
(b) We consider a European put with strike price K
the price of this option at time 0.
==
16 and expiration T = 2 years. Find
(c) Provide the number of shares of stock that the replicating portfolio contains at each pos-
sible position.
(d) You find this option available on the market for $2. What do you do? (Short answer.)
(e) We consider an American put with strike price K
= 16 and expiration T
=
2 years. Find
the price of this option at time 0 and describe the optimal exercising strategy.
(f) We consider an American call with strike price K ○ = 16 and expiration T = 2 years. Find
the price of this option at time 0 and describe…
Chapter 14 Solutions
Mathematics All Around (6th Edition)
Ch. 14.1 - Sharpening Your Skills. In Exercises 1 and 2,...Ch. 14.1 - Sharpening Your Skills. In Exercises 1 and 2,...Ch. 14.1 - Sharpening Your Skills. In Exercises 3 and 4,...Ch. 14.1 - Sharpening Your Skills. In Exercises 3 and 4,...Ch. 14.1 - Sharpening Your Skills. In Exercises 5 and 6,...Ch. 14.1 - Sharpening Your Skills. In Exercises 5 and 6,...Ch. 14.1 - Prob. 7ECh. 14.1 - Sharpening Your Skills. In Exercises 7 and 8,...Ch. 14.1 - Prob. 9ECh. 14.1 - Sharpening Your Skills. In Exercises 9 and 10,...
Ch. 14.1 - Prob. 11ECh. 14.1 - Prob. 12ECh. 14.1 - Applying What Youve Learned. Customers at...Ch. 14.1 - Applying What Youve Learned. Scheduling a rec...Ch. 14.1 - Applying What Youve Learned. Data similar to that...Ch. 14.1 - Applying What Youve Learned. Data similar to that...Ch. 14.1 - Comparing wage data. The following bar graphs...Ch. 14.1 - Applying What Youve Lerarned. Comparing wage data....Ch. 14.1 - Applying What Youve Learned. Comparing wage data....Ch. 14.1 - Applying What Youve Learned. Comparing wage data....Ch. 14.1 - Applying What Youve Learned. Comparing wage data....Ch. 14.1 - Prob. 22ECh. 14.1 - Prob. 23ECh. 14.1 - Prob. 24ECh. 14.1 - Prob. 25ECh. 14.1 - For Exercises 23 26, use the four graphs of the...Ch. 14.1 - Applying What Youve Learned. Comparing training...Ch. 14.1 - Applying What Youve Learned. Comparing weight-loss...Ch. 14.1 - Applying What Youve Learned. Super Bowl scores....Ch. 14.1 - Applying What Youve Learned. Law School Aptitude...Ch. 14.1 - In Exercises 31 34, first group the data using an...Ch. 14.1 - Applying What Youve Learned. In Exercises 31 34,...Ch. 14.1 - In Exercises 31 34, first group the data using an...Ch. 14.1 - Applying What Youve Learned. In Exercises 31 34,...Ch. 14.1 - Communicating Mathematics What is the difference...Ch. 14.1 - Communicating Mathematics If you are using a bar...Ch. 14.1 - Communicating Mathematics What is the difference...Ch. 14.1 - Communicating Mathematics What do you see as an...Ch. 14.1 - Challenge Yourself How might you present three...Ch. 14.1 - Challenge Yourself 42. The following table is an...Ch. 14.2 - Prob. 1ECh. 14.2 - Prob. 2ECh. 14.2 - Sharpening Your Skills Find the mean, median, and...Ch. 14.2 - Prob. 4ECh. 14.2 - Prob. 5ECh. 14.2 - Prob. 6ECh. 14.2 - Prob. 7ECh. 14.2 - Prob. 8ECh. 14.2 - Prob. 9ECh. 14.2 - Prob. 10ECh. 14.2 - Prob. 11ECh. 14.2 - Prob. 12ECh. 14.2 - Prob. 13ECh. 14.2 - Prob. 14ECh. 14.2 - Prob. 15ECh. 14.2 - Prob. 16ECh. 14.2 - In Exercises 1720, a give the five-number summary...Ch. 14.2 - Prob. 18ECh. 14.2 - In Exercises 1720, a give the five-number summary...Ch. 14.2 - In Exercises 1720, a give the five-number summary...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - In Exercises 2128, find the mean, median, and mode...Ch. 14.2 - Many colleges assign numerical points to grades as...Ch. 14.2 - Prob. 30ECh. 14.2 - Exam scores. Izzy had an 84 and an 86 on his first...Ch. 14.2 - Prob. 32ECh. 14.2 - Prob. 33ECh. 14.2 - Prob. 34ECh. 14.2 - Exam scores. Assume that in your History of Film...Ch. 14.2 - Prob. 36ECh. 14.2 - Prob. 37ECh. 14.2 - Prob. 38ECh. 14.2 - Prob. 39ECh. 14.2 - Example 6 Using Stem-and-Leaf Home Run Records...Ch. 14.2 - Prob. 41ECh. 14.2 - Prob. 42ECh. 14.2 - Prob. 43ECh. 14.2 - Prob. 44ECh. 14.2 - Prob. 45ECh. 14.2 - Prob. 46ECh. 14.2 - Prob. 47ECh. 14.2 - A college placement office has made a comparative...Ch. 14.2 - Prob. 49ECh. 14.2 - Prob. 50ECh. 14.2 - Give three separate real-life examples in which...Ch. 14.2 - Which measure of central tendency do you think is...Ch. 14.2 - Manipulating data. Choose some set of data...Ch. 14.2 - Analyzing misleading graphs. Find a graph in the...Ch. 14.2 - Prob. 55ECh. 14.2 - Prob. 56ECh. 14.2 - Prob. 57ECh. 14.2 - Prob. 58ECh. 14.2 - Prob. 59ECh. 14.2 - Prob. 60ECh. 14.2 - Prob. 61ECh. 14.2 - Prob. 62ECh. 14.2 - Prob. 63ECh. 14.2 - Prob. 64ECh. 14.2 - Prob. 65ECh. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Sharpening Your Skills Find the range, mean, and...Ch. 14.3 - Prob. 9ECh. 14.3 - Prob. 10ECh. 14.3 - Prob. 11ECh. 14.3 - Prob. 12ECh. 14.3 - Prob. 13ECh. 14.3 - Prob. 14ECh. 14.3 - Prob. 15ECh. 14.3 - Prob. 16ECh. 14.3 - Prob. 17ECh. 14.3 - Prob. 18ECh. 14.3 - Prob. 19ECh. 14.3 - Applying What Youve Learned Summarizing age data....Ch. 14.3 - Prob. 21ECh. 14.3 - Prob. 22ECh. 14.3 - Prob. 23ECh. 14.3 - Prob. 24ECh. 14.3 - Prob. 25ECh. 14.3 - Prob. 26ECh. 14.3 - Prob. 27ECh. 14.3 - Prob. 28ECh. 14.3 - Prob. 29ECh. 14.3 - Prob. 30ECh. 14.3 - In Exercises 31 and 32, we present information on...Ch. 14.3 - In Exercises 31 and 32, we present information on...Ch. 14.3 - Human resources. As the manager of the human...Ch. 14.3 - Prob. 34ECh. 14.3 - Prob. 35ECh. 14.3 - Prob. 36ECh. 14.3 - Prob. 37ECh. 14.3 - Prob. 38ECh. 14.3 - Laptop batteries. A particular brand of laptop was...Ch. 14.3 - Study times. A group of students were sampled with...Ch. 14.3 - Prob. 41ECh. 14.3 - Prob. 42ECh. 14.3 - Prob. 43ECh. 14.3 - Use the following graphs for Exercise 44 a. Which...Ch. 14.3 - Prob. 45ECh. 14.3 - Prob. 46ECh. 14.3 - Prob. 47ECh. 14.3 - Prob. 48ECh. 14.4 - Assume that the distribution in Exercises 1 6 has...Ch. 14.4 - Assume that the distribution in Exercises 1 6 has...Ch. 14.4 - Assume that the distribution in Exercises 1 6 has...Ch. 14.4 - Assume that the distribution in Exercises 1 6 has...Ch. 14.4 - Assume that the distribution in Exercises 1 6 has...Ch. 14.4 - Assume that the distribution in Exercises 1 6 has...Ch. 14.4 - Assume that the distribution in Exercises 7 12...Ch. 14.4 - Assume that the distribution in Exercises 7 12...Ch. 14.4 - Assume that the distribution in Exercises 7 12...Ch. 14.4 - Assume that the distribution in Exercises 7 12...Ch. 14.4 - Assume that the distribution in Exercises 7 12...Ch. 14.4 - Assume that the distribution in Exercises 7 12...Ch. 14.4 - Use the following graph of the standard normal...Ch. 14.4 - Use the following graph of the standard normal...Ch. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Prob. 18ECh. 14.4 - Prob. 19ECh. 14.4 - Prob. 20ECh. 14.4 - Prob. 21ECh. 14.4 - Prob. 22ECh. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Prob. 24ECh. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Prob. 28ECh. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Prob. 30ECh. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Prob. 32ECh. 14.4 - Use Table 14.19 to find the percent of the area...Ch. 14.4 - Prob. 34ECh. 14.4 - Prob. 35ECh. 14.4 - In Exercises 35 - 40, we give you a mean, a...Ch. 14.4 - Prob. 37ECh. 14.4 - Prob. 38ECh. 14.4 - Prob. 39ECh. 14.4 - Prob. 40ECh. 14.4 - Prob. 41ECh. 14.4 - In Exercises 41 - 46, we give you a mean, a...Ch. 14.4 - Prob. 43ECh. 14.4 - Prob. 44ECh. 14.4 - Prob. 45ECh. 14.4 - Prob. 46ECh. 14.4 - Prob. 47ECh. 14.4 - Prob. 48ECh. 14.4 - Prob. 49ECh. 14.4 - Prob. 50ECh. 14.4 - Prob. 51ECh. 14.4 - Prob. 52ECh. 14.4 - Prob. 53ECh. 14.4 - Prob. 54ECh. 14.4 - Prob. 55ECh. 14.4 - Prob. 56ECh. 14.4 - Prob. 57ECh. 14.4 - Prob. 58ECh. 14.4 - Prob. 59ECh. 14.4 - Prob. 60ECh. 14.4 - Prob. 61ECh. 14.4 - Prob. 62ECh. 14.4 - Prob. 63ECh. 14.4 - Weight lifting.In a power lifting competition the...Ch. 14.4 - Strength of cables.A certain type of cable has a...Ch. 14.4 - Prob. 66ECh. 14.4 - Prob. 67ECh. 14.4 - Prob. 68ECh. 14.4 - Prob. 69ECh. 14.4 - Prob. 70ECh. 14.4 - Prob. 71ECh. 14.4 - Prob. 72ECh. 14.4 - Prob. 73ECh. 14.4 - Prob. 74ECh. 14.4 - Analyzing the SATs. Assume that the math SAT...Ch. 14.4 - Prob. 76ECh. 14.4 - Prob. 77ECh. 14.4 - Prob. 78ECh. 14.4 - Prob. 79ECh. 14.4 - Prob. 80ECh. 14.4 - Prob. 81ECh. 14.4 - Prob. 82ECh. 14.4 - Prob. 83ECh. 14.4 - Prob. 84ECh. 14.4 - Prob. 85ECh. 14.4 - Prob. 86ECh. 14.4 - If a distribution has a mean of 40 and a standard...Ch. 14.4 - Prob. 88ECh. 14.4 - Prob. 89ECh. 14.4 - Prob. 90ECh. 14.5 - In Exercises 1 and 2, state what kind of...Ch. 14.5 - In Exercises 1 and 2, state what kind of...Ch. 14.5 - For Exercises 3 6, do the following: a. Plot the...Ch. 14.5 - Prob. 4ECh. 14.5 - Prob. 5ECh. 14.5 - Prob. 6ECh. 14.5 - Prob. 7ECh. 14.5 - Prob. 8ECh. 14.5 - Prob. 9ECh. 14.5 - Prob. 10ECh. 14.5 - Prob. 11ECh. 14.5 - Prob. 12ECh. 14.5 - In Exercises 11 14, find the line of best fit for...Ch. 14.5 - Prob. 14ECh. 14.5 - Prob. 15ECh. 14.5 - Prob. 16ECh. 14.5 - Prob. 17ECh. 14.5 - Prob. 18ECh. 14.5 - In Exercises 19 22, find the line of best fit for...Ch. 14.5 - In Exercises 19 22, find the line of best fit for...Ch. 14.5 - In Exercises 19 22, find the line of best fit for...Ch. 14.5 - In Exercises 19 22, find the line of best fit for...Ch. 14.5 - In Example 3, we found the absolute value of the...Ch. 14.5 - Prob. 24ECh. 14.5 - Prob. 25ECh. 14.5 - Prob. 26ECh. 14.5 - Prob. 27ECh. 14.CR - Prob. 1CRCh. 14.CR - Prob. 2CRCh. 14.CR - Prob. 3CRCh. 14.CR - Prob. 4CRCh. 14.CR - The lists represent the ages of actors M and...Ch. 14.CR - Prob. 6CRCh. 14.CR - Prob. 7CRCh. 14.CR - Prob. 8CRCh. 14.CR - Prob. 9CRCh. 14.CR - Prob. 10CRCh. 14.CR - Prob. 11CRCh. 14.CR - Prob. 12CRCh. 14.CR - Prob. 13CRCh. 14.CR - Prob. 14CRCh. 14.CR - Prob. 15CRCh. 14.CR - Prob. 16CRCh. 14.CR - Prob. 17CRCh. 14.CR - State what kind of correlation, if any, is...Ch. 14.CR - Prob. 19CRCh. 14.CT - Prob. 1CTCh. 14.CT - Prob. 2CTCh. 14.CT - Prob. 3CTCh. 14.CT - Prob. 4CTCh. 14.CT - Prob. 5CTCh. 14.CT - Prob. 6CTCh. 14.CT - Prob. 7CTCh. 14.CT - Prob. 8CTCh. 14.CT - Prob. 9CTCh. 14.CT - Prob. 10CTCh. 14.CT - Prob. 11CTCh. 14.CT - Prob. 12CTCh. 14.CT - Prob. 13CTCh. 14.CT - Prob. 14CTCh. 14.CT - Prob. 15CTCh. 14.CT - Prob. 16CTCh. 14.CT - Prob. 17CTCh. 14.CT - Prob. 18CT
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