Mathematics with Applications In the Management, Natural and Social Sciences (11th Edition)
11th Edition
ISBN: 9780321931078
Author: Margaret L. Lial, Thomas W. Hungerford, John P. Holcomb, Bernadette Mullins
Publisher: PEARSON
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Chapter 2, Problem 38RE
(a)
To determine
To calculate: The least-square regression line of the given data,
Year |
2000 |
2005 |
2008 |
2009 |
2010 |
2011 |
Amount |
2925 |
3407 |
3791 |
4056 |
4232 |
4341 |
(b)
To determine
To graph: The least-square regression line of the given data,
Year |
2000 |
2005 |
2008 |
2009 |
2010 |
2011 |
Amount |
2925 |
3407 |
3791 |
4056 |
4232 |
4341 |
(c)
To determine
Whether the least-square regression line is a good fit for the given data,
Year |
2000 |
2005 |
2008 |
2009 |
2010 |
2011 |
Amount |
2925 |
3407 |
3791 |
4056 |
4232 |
4341 |
(d)
To determine
To calculate: The
Year |
2000 |
2005 |
2008 |
2009 |
2010 |
2011 |
Amount |
2925 |
3407 |
3791 |
4056 |
4232 |
4341 |
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Chapter 2 Solutions
Mathematics with Applications In the Management, Natural and Social Sciences (11th Edition)
Ch. 2.1 - Checkpoint 1
Locate and (−5,0) on a coordinate...Ch. 2.1 - Checkpoint 2
Which of the following are solutions...Ch. 2.1 - Checkpoint 3
Graph
Ch. 2.1 - Checkpoint 4
Find the x- and y-intercepts of the...Ch. 2.1 - Checkpoint 5
From Figure 2.7 determine when the...Ch. 2.1 - Checkpoint 6
In Example 6, find the profit from...Ch. 2.1 - Checkpoint 7
Use a graphing calculator to graph ...Ch. 2.1 - Checkpoint 8
Use a graphical root finder to...Ch. 2.1 - Prob. 9CPCh. 2.1 - State the quadrant in which each point lies.
1.
Ch. 2.1 - State the quadrant in which each point lies.
2.
Ch. 2.1 - Determine whether the given ordered pair is a...Ch. 2.1 - Determine whether the given ordered pair is a...Ch. 2.1 - Determine whether the given ordered pair is a...Ch. 2.1 - Determine whether the given ordered pair is a...Ch. 2.1 - Prob. 7ECh. 2.1 - Prob. 8ECh. 2.1 - Prob. 9ECh. 2.1 - Prob. 10ECh. 2.1 - Prob. 11ECh. 2.1 - Prob. 12ECh. 2.1 - List the x-intercepts and y-intercepts of each...Ch. 2.1 - List the x-intercepts and y-intercepts of each...Ch. 2.1 - List the x-intercepts and y-intercepts of each...Ch. 2.1 - List the x-intercepts and y-intercepts of each...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Find the x-intercepts and y-intercepts of the...Ch. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Prob. 28ECh. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Prob. 30ECh. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Prob. 36ECh. 2.1 - Prob. 37ECh. 2.1 - Prob. 38ECh. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Sketch the graph of the equation. (See Examples...Ch. 2.1 - Business An article in the Wall Street Journal on...Ch. 2.1 - Prob. 42ECh. 2.1 - Prob. 43ECh. 2.1 - Prob. 44ECh. 2.1 - Business Use the revenue and cost graphs for the...Ch. 2.1 - Prob. 46ECh. 2.1 - Business Use the revenue and cost graphs for the...Ch. 2.1 - Prob. 48ECh. 2.1 - Prob. 49ECh. 2.1 - Business The graph below gives the annual...Ch. 2.1 - Prob. 51ECh. 2.1 - Prob. 52ECh. 2.1 - Business The graph below gives the total sales (in...Ch. 2.1 - Business The graph below gives the total sales (in...Ch. 2.1 - Business The graph below gives the total sales (in...Ch. 2.1 - Prob. 56ECh. 2.1 - Prob. 57ECh. 2.1 - Prob. 58ECh. 2.1 - Prob. 59ECh. 2.1 - Prob. 60ECh. 2.1 - Prob. 61ECh. 2.1 - Prob. 62ECh. 2.1 - Use a graphing calculator to find the graph of the...Ch. 2.1 - Use a graphing calculator to find the graph of the...Ch. 2.1 - Use a graphing calculator to find the graph of the...Ch. 2.1 - Use a graphing calculator to find the graph of the...Ch. 2.1 - Prob. 67ECh. 2.1 - Prob. 68ECh. 2.1 - Prob. 69ECh. 2.1 - Prob. 70ECh. 2.1 - Prob. 71ECh. 2.1 - Prob. 72ECh. 2.1 - Use a graphing calculator to approximate all real...Ch. 2.1 - Prob. 74ECh. 2.1 - Prob. 75ECh. 2.1 - Use a graphing calculator to approximate all real...Ch. 2.1 - Prob. 77ECh. 2.1 - Prob. 78ECh. 2.1 - Prob. 79ECh. 2.1 - Prob. 80ECh. 2.2 - Checkpoint 1
Find the slope of the line through...Ch. 2.2 - Checkpoint 2
Find an equation for the line...Ch. 2.2 - Prob. 3CPCh. 2.2 - Checkpoint 4
List the slopes of the following...Ch. 2.2 - Checkpoint 5
Graph the given lines and label the...Ch. 2.2 - Prob. 6CPCh. 2.2 - Checkpoint 7
Find both the point–slope and the...Ch. 2.2 - Prob. 8CPCh. 2.2 - Prob. 9CPCh. 2.2 - Find the slope of the given line, if it is...Ch. 2.2 - Find the slope of the given line, if it is...Ch. 2.2 - Prob. 3ECh. 2.2 - Find the slope of the given line, if it is...Ch. 2.2 - Prob. 5ECh. 2.2 - Find the slope of the given line, if it is...Ch. 2.2 - Find the slope of the given line, if it is...Ch. 2.2 - Prob. 8ECh. 2.2 - Find an equation of the line with the given...Ch. 2.2 - Prob. 10ECh. 2.2 - Prob. 11ECh. 2.2 - Prob. 12ECh. 2.2 - Find an equation of the line with the given...Ch. 2.2 - Prob. 14ECh. 2.2 - Prob. 15ECh. 2.2 - Find the slope m and the y-intercept b of the line...Ch. 2.2 - Prob. 17ECh. 2.2 - Prob. 18ECh. 2.2 - Find the slope m and the y-intercept b of the line...Ch. 2.2 - Find the slope m and the y-intercept b of the line...Ch. 2.2 - Prob. 21ECh. 2.2 - Prob. 22ECh. 2.2 - Prob. 23ECh. 2.2 - Prob. 24ECh. 2.2 - 25. For which of the line segments in the figure...Ch. 2.2 - 26. Match each equation with the line that most...Ch. 2.2 - Prob. 27ECh. 2.2 - Prob. 28ECh. 2.2 - Prob. 29ECh. 2.2 - Prob. 30ECh. 2.2 - Sketch the graph of the given equation and label...Ch. 2.2 - Prob. 32ECh. 2.2 - Prob. 33ECh. 2.2 - Determine whether each pair of lines is parallel,...Ch. 2.2 - Prob. 35ECh. 2.2 - Prob. 36ECh. 2.2 - Prob. 37ECh. 2.2 - Determine whether each pair of lines is parallel,...Ch. 2.2 - Prob. 39ECh. 2.2 - Prob. 40ECh. 2.2 - Find an equation of the line with slope m that...Ch. 2.2 - Prob. 42ECh. 2.2 - Prob. 43ECh. 2.2 - Prob. 44ECh. 2.2 - Prob. 45ECh. 2.2 - Prob. 46ECh. 2.2 - Prob. 47ECh. 2.2 - Prob. 48ECh. 2.2 - Find an equation of the line that passes through...Ch. 2.2 - Prob. 50ECh. 2.2 - Find an equation of the line that passes through...Ch. 2.2 - Find an equation of the line that passes through...Ch. 2.2 - Find an equation of the line satisfying the given...Ch. 2.2 - Prob. 54ECh. 2.2 - Find an equation of the line satisfying the given...Ch. 2.2 - Prob. 56ECh. 2.2 - Find an equation of the line satisfying the given...Ch. 2.2 - Prob. 58ECh. 2.2 - Prob. 59ECh. 2.2 - Prob. 60ECh. 2.2 - Find an equation of the line satisfying the given...Ch. 2.2 - Prob. 62ECh. 2.2 - Prob. 63ECh. 2.2 - Prob. 64ECh. 2.2 - Prob. 65ECh. 2.2 - Prob. 66ECh. 2.2 - Prob. 67ECh. 2.2 - Prob. 68ECh. 2.2 - Prob. 69ECh. 2.2 - Prob. 70ECh. 2.2 - Prob. 71ECh. 2.2 - Prob. 72ECh. 2.2 - Prob. 73ECh. 2.2 - Prob. 74ECh. 2.2 - Prob. 75ECh. 2.2 - Prob. 76ECh. 2.2 - Prob. 77ECh. 2.2 - Prob. 78ECh. 2.3 - Checkpoint 1
Use the points (5, 917) and (9, 1038)...Ch. 2.3 - Prob. 2CPCh. 2.3 - Prob. 3CPCh. 2.3 - Prob. 4CPCh. 2.3 - Prob. 5CPCh. 2.3 - 1. Physical Science The following table shows...Ch. 2.3 - Physical Science Use the linear equation derived...Ch. 2.3 - Physical Science Use the liner equation derived in...Ch. 2.3 - Physical Science Use the linear equation derived...Ch. 2.3 - Prob. 5ECh. 2.3 - Prob. 6ECh. 2.3 - Prob. 7ECh. 2.3 - Prob. 8ECh. 2.3 - In each of the next set of problems, assume that...Ch. 2.3 - Prob. 10ECh. 2.3 - Prob. 11ECh. 2.3 - Prob. 12ECh. 2.3 - Prob. 13ECh. 2.3 - Prob. 14ECh. 2.3 - Prob. 15ECh. 2.3 - In Exercises 15–18 find the required linear model...Ch. 2.3 - Prob. 17ECh. 2.3 - Prob. 18ECh. 2.3 - Prob. 19ECh. 2.3 - Prob. 20ECh. 2.3 - Prob. 21ECh. 2.3 - Prob. 22ECh. 2.4 - Checkpoint 1
(a) First multiply both sides of −6 <...Ch. 2.4 - Checkpoint 2
Solve these inequalities. Graph each...Ch. 2.4 - Prob. 3CPCh. 2.4 - Prob. 4CPCh. 2.4 - Prob. 5CPCh. 2.4 - Prob. 6CPCh. 2.4 - Prob. 7CPCh. 2.4 - Prob. 8CPCh. 2.4 - Prob. 9CPCh. 2.4 - Prob. 1ECh. 2.4 - 2. The three-part inequality means “p is less...Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Prob. 5ECh. 2.4 - Prob. 6ECh. 2.4 - Prob. 7ECh. 2.4 - Prob. 8ECh. 2.4 - Prob. 9ECh. 2.4 - Prob. 10ECh. 2.4 - Prob. 11ECh. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Prob. 18ECh. 2.4 - Prob. 19ECh. 2.4 - Prob. 20ECh. 2.4 - Prob. 21ECh. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Solve each inequality and graph each solution....Ch. 2.4 - Prob. 26ECh. 2.4 - In the following exercises, write a linear...Ch. 2.4 - In the following exercises, write a linear...Ch. 2.4 - In the following exercises, write a linear...Ch. 2.4 - In the following exercises, write a linear...Ch. 2.4 - Prob. 31ECh. 2.4 - Prob. 32ECh. 2.4 - Business In Exercises 31–36, find all values of x...Ch. 2.4 - Prob. 34ECh. 2.4 - Business In Exercises 31–36, find all values of x...Ch. 2.4 - Prob. 36ECh. 2.4 - Solve each inequality. Graph each solution. (See...Ch. 2.4 - Prob. 38ECh. 2.4 - Prob. 39ECh. 2.4 - Prob. 40ECh. 2.4 - Prob. 41ECh. 2.4 - Prob. 42ECh. 2.4 - Prob. 43ECh. 2.4 - Prob. 44ECh. 2.4 - Prob. 45ECh. 2.4 - Prob. 46ECh. 2.4 - Prob. 47ECh. 2.4 - Prob. 48ECh. 2.4 - Prob. 49ECh. 2.4 - Prob. 50ECh. 2.4 - Prob. 51ECh. 2.4 - Prob. 52ECh. 2.4 - Prob. 53ECh. 2.4 - Prob. 54ECh. 2.4 - Prob. 55ECh. 2.4 - Prob. 56ECh. 2.5 - Checkpoint 1
Solve each inequality. Graph the...Ch. 2.5 - Prob. 2CPCh. 2.5 - Prob. 3CPCh. 2.5 - Prob. 4CPCh. 2.5 - Prob. 5CPCh. 2.5 - Prob. 6CPCh. 2.5 - Prob. 7CPCh. 2.5 - Prob. 1ECh. 2.5 - Prob. 2ECh. 2.5 - Solve each of these quadratic inequalities. Graph...Ch. 2.5 - Solve each of these quadratic inequalities. Graph...Ch. 2.5 - Prob. 5ECh. 2.5 - Prob. 6ECh. 2.5 - Prob. 7ECh. 2.5 - Prob. 8ECh. 2.5 - Solve each of these quadratic inequalities. Graph...Ch. 2.5 - Prob. 10ECh. 2.5 - Solve each of these quadratic inequalities. Graph...Ch. 2.5 - Prob. 12ECh. 2.5 - Solve these inequalities. (See Example 4.) 13.
Ch. 2.5 - Solve these inequalities. (See Example 4.) 14.
Ch. 2.5 - Prob. 15ECh. 2.5 - Prob. 16ECh. 2.5 - Solve these inequalities. (See Example 4.)
17.
Ch. 2.5 - Prob. 18ECh. 2.5 - Prob. 19ECh. 2.5 - Prob. 20ECh. 2.5 - 21. A student solved the inequality by taking...Ch. 2.5 - Prob. 22ECh. 2.5 - Use a graphing calculator to solve these...Ch. 2.5 - Use a graphing calculator to solve these...Ch. 2.5 - Prob. 25ECh. 2.5 - Prob. 26ECh. 2.5 - Prob. 27ECh. 2.5 - Prob. 28ECh. 2.5 - Solve these rational inequalities. (See Examples 7...Ch. 2.5 - Prob. 30ECh. 2.5 - Prob. 31ECh. 2.5 - Prob. 32ECh. 2.5 - Prob. 33ECh. 2.5 - Prob. 34ECh. 2.5 - Prob. 35ECh. 2.5 - Solve these rational inequalities. (See Examples 7...Ch. 2.5 - Solve these rational inequalities. (See Examples 7...Ch. 2.5 - Prob. 38ECh. 2.5 - Prob. 39ECh. 2.5 - Prob. 40ECh. 2.5 - 41. Business An analyst has found that her...Ch. 2.5 - Prob. 42ECh. 2.5 - Prob. 43ECh. 2.5 - Prob. 44ECh. 2.5 - Prob. 45ECh. 2.5 - Prob. 46ECh. 2.5 - Prob. 47ECh. 2.5 - Prob. 48ECh. 2 - Prob. 1CECh. 2 - Business The following table gives the number of...Ch. 2 - Business The following table gives the number of...Ch. 2 - Prob. 4CECh. 2 - Prob. 5CECh. 2 - Prob. 6CECh. 2 - Prob. 7CECh. 2 - Prob. 8CECh. 2 - Prob. 9CECh. 2 - Prob. 1EPCh. 2 - Prob. 2EPCh. 2 - Prob. 3EPCh. 2 - Prob. 4EPCh. 2 - Prob. 5EPCh. 2 - Which of the ordered pairs (−2, 3), (0, −5), (2,...Ch. 2 - Prob. 2RECh. 2 - Sketch the graph of each equation. 3.
Ch. 2 - Prob. 4RECh. 2 - Sketch the graph of each equation. 5.
Ch. 2 - Prob. 6RECh. 2 - Prob. 7RECh. 2 - Prob. 8RECh. 2 - Prob. 9RECh. 2 - Prob. 10RECh. 2 - Prob. 11RECh. 2 - Prob. 12RECh. 2 - In Exercises 12–21, find the slope of the line...Ch. 2 - Prob. 14RECh. 2 - Prob. 15RECh. 2 - Prob. 16RECh. 2 - In Exercises 12–21, find the slope of the line...Ch. 2 - Prob. 18RECh. 2 - In Exercises 12–21, find the slope of the line...Ch. 2 - In Exercises 12–21, find the slope of the line...Ch. 2 - In Exercises 12–21, find the slope of the line...Ch. 2 - Prob. 22RECh. 2 - 23. Graph the line through (−4, 1) with m = 3.
Ch. 2 - 24. What information is needed to determine the...Ch. 2 - Find an equation for each of the following...Ch. 2 - Prob. 26RECh. 2 - Find an equation for each of the following...Ch. 2 - Find an equation for each of the following...Ch. 2 - Prob. 29RECh. 2 - Prob. 30RECh. 2 - Find an equation for each of the following...Ch. 2 - 32. Here is a sample SAT question: Which of the...Ch. 2 - Prob. 33RECh. 2 - 34. Business In the year 2005, the total domestic...Ch. 2 - 35. Business The following table gives the total...Ch. 2 - Prob. 36RECh. 2 - Prob. 37RECh. 2 - Prob. 38RECh. 2 - Solve each inequality. 39.
Ch. 2 - Solve each inequality. 40.
Ch. 2 - Solve each inequality. 41.
Ch. 2 - Solve each inequality. 42.
Ch. 2 - Solve each inequality. 43.
Ch. 2 - Solve each inequality. 44.
Ch. 2 - Solve each inequality. 45.
Ch. 2 - Solve each inequality. 46.
Ch. 2 - Solve each inequality. 47.
Ch. 2 - Solve each inequality. 48.
Ch. 2 - Solve each inequality. 49.
Ch. 2 - Solve each inequality. 50.
Ch. 2 - Prob. 51RECh. 2 - Prob. 52RECh. 2 - 53. Business The amount of renewable energy...Ch. 2 - 54. Business One car rental firm charges $125 for...Ch. 2 - Solve each inequality. 55.
Ch. 2 - Solve each inequality. 56.
Ch. 2 - Solve each inequality. 57
Ch. 2 - Solve each inequality. 58.
Ch. 2 - Solve each inequality. 59.
Ch. 2 - Solve each inequality. 60.
Ch. 2 - Solve each inequality.
61.
Ch. 2 - Solve each inequality.
62.
Ch. 2 - Solve each inequality.
63.
Ch. 2 - Solve each inequality.
64.
Ch. 2 - Solve each inequality.
65.
Ch. 2 - Solve each inequality.
66.
Ch. 2 - Prob. 67RECh. 2 - Prob. 68RE
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- Calculus lll May I please have the blank lines completed, and final statement defined as a result? Thank you for the support!arrow_forwardFor 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, 91arrow_forwardIn 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_forward
- 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?arrow_forwardThe 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_forward
- Question 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_forwardIn 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_forward
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