Discrete Mathematics with Graph Theory (Classic Version) (3rd Edition) (Pearson Modern Classics for Advanced Mathematics Series)
3rd Edition
ISBN: 9780134689555
Author: Edgar Goodaire, Michael Parmenter
Publisher: PEARSON
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Chapter 5.3, Problem 1TFQ
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The recurrence relation
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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…
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.
Please 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.
Chapter 5 Solutions
Discrete Mathematics with Graph Theory (Classic Version) (3rd Edition) (Pearson Modern Classics for Advanced Mathematics Series)
Ch. 5.1 - True/False Questions The statement i=1n(2i1)=n2...Ch. 5.1 - Prob. 2TFQCh. 5.1 - Prob. 3TFQCh. 5.1 - Prob. 4TFQCh. 5.1 - Prob. 5TFQCh. 5.1 - Prob. 6TFQCh. 5.1 - Prob. 7TFQCh. 5.1 - Prob. 8TFQCh. 5.1 - Prob. 9TFQCh. 5.1 - Prob. 10TFQ
Ch. 5.1 - Prob. 1ECh. 5.1 - Prob. 2ECh. 5.1 - Prove that it is possible to fill an order for n32...Ch. 5.1 - Use mathematical induction to prove the truth of...Ch. 5.1 - Prove by mathematical induction that...Ch. 5.1 - Use mathematical induction to establish the truth...Ch. 5.1 - 7. Rewrite each of the sums in Exercise 6 using...Ch. 5.1 - 8. Use mathematical induction to establish each of...Ch. 5.1 - 9. Use mathematical induction to establish the...Ch. 5.1 - Prob. 10ECh. 5.1 - Prob. 11ECh. 5.1 - Prob. 12ECh. 5.1 - Prob. 13ECh. 5.1 - Prob. 14ECh. 5.1 - Prob. 15ECh. 5.1 - Prob. 16ECh. 5.1 - Prob. 17ECh. 5.1 - Prob. 18ECh. 5.1 - Prob. 19ECh. 5.1 - Prob. 20ECh. 5.1 - 21. Prove the Chinese Remainder Theorem, 4.5.1, by...Ch. 5.1 - Prob. 22ECh. 5.1 - Prob. 23ECh. 5.1 - Prob. 24ECh. 5.1 - Prob. 25ECh. 5.1 - Prob. 26ECh. 5.1 - Prob. 27ECh. 5.1 - Prob. 28ECh. 5.1 - Prob. 29ECh. 5.1 - Given an equal arm balance capable of determining...Ch. 5.1 - Prob. 31ECh. 5.1 - 32. Let be any integer greater than 1. Show that...Ch. 5.1 - Prob. 33ECh. 5.1 - Prob. 34ECh. 5.1 - Prob. 35ECh. 5.1 - Prob. 36ECh. 5.1 - Prob. 37ECh. 5.1 - 38. For a given natural number prove that the set...Ch. 5.1 - 39. (a) Prove that the strong form of the...Ch. 5.1 - Prob. 40ECh. 5.1 - Prob. 41ECh. 5.2 - True/False Questions
If and for , then .
Ch. 5.2 - Prob. 2TFQCh. 5.2 - Prob. 3TFQCh. 5.2 - Prob. 4TFQCh. 5.2 - Prob. 5TFQCh. 5.2 - Prob. 6TFQCh. 5.2 - Prob. 7TFQCh. 5.2 - True/False Questions The Fibonacci sequence arose...Ch. 5.2 - Prob. 9TFQCh. 5.2 - Prob. 10TFQCh. 5.2 - Give recursive definitions of each of the...Ch. 5.2 - Find the first seven terms of the sequence {an}...Ch. 5.2 - Let a1,a2,a3,...... be the sequence defined by...Ch. 5.2 - Prob. 4ECh. 5.2 - Prob. 5ECh. 5.2 - Prob. 6ECh. 5.2 - Prob. 7ECh. 5.2 - 8. Suppose is a sequence such that and, for, ....Ch. 5.2 - Prob. 9ECh. 5.2 - Prob. 10ECh. 5.2 - Prob. 11ECh. 5.2 - Prob. 12ECh. 5.2 - Prob. 13ECh. 5.2 - Prob. 14ECh. 5.2 - Prob. 15ECh. 5.2 - Prob. 16ECh. 5.2 - Prob. 17ECh. 5.2 - 18. Consider the arithmetic sequence with first...Ch. 5.2 - Prob. 19ECh. 5.2 - Prob. 20ECh. 5.2 - Prob. 21ECh. 5.2 - Prob. 22ECh. 5.2 - Prob. 23ECh. 5.2 - Prob. 24ECh. 5.2 - Prob. 25ECh. 5.2 - Prob. 26ECh. 5.2 - Prob. 27ECh. 5.2 - Prob. 28ECh. 5.2 - Prob. 29ECh. 5.2 - Prob. 30ECh. 5.2 - Prob. 31ECh. 5.2 - 32. (a) Find the 19th and 100th terms of the...Ch. 5.2 - Given that each sum below is the sum of part of an...Ch. 5.2 - Prob. 34ECh. 5.2 - 35. Is it possible for an arithmetic sequence to...Ch. 5.2 - Prob. 36ECh. 5.2 - Prob. 37ECh. 5.2 - Prob. 38ECh. 5.2 - Prob. 39ECh. 5.2 - Prob. 40ECh. 5.2 - Prob. 41ECh. 5.2 - Prob. 42ECh. 5.2 - Prob. 43ECh. 5.2 - 44. Define a sequence recursively as follows:
...Ch. 5.2 - Prob. 45ECh. 5.2 - Prob. 46ECh. 5.2 - Prob. 47ECh. 5.2 - 48. Represent the Fibonacci sequence by , for...Ch. 5.2 - Prob. 49ECh. 5.2 - Prob. 50ECh. 5.2 - Prob. 51ECh. 5.2 - Prob. 52ECh. 5.2 - Prob. 53ECh. 5.2 - Prob. 54ECh. 5.2 - Prob. 55ECh. 5.2 - Prob. 56ECh. 5.2 - Prob. 57ECh. 5.2 - Prob. 58ECh. 5.3 - True/False Questions
The recurrence relation can...Ch. 5.3 - Prob. 2TFQCh. 5.3 - Prob. 3TFQCh. 5.3 - Prob. 4TFQCh. 5.3 - Prob. 5TFQCh. 5.3 - Prob. 6TFQCh. 5.3 - Prob. 7TFQCh. 5.3 - Prob. 8TFQCh. 5.3 - Prob. 9TFQCh. 5.3 - Prob. 10TFQCh. 5.3 - Solve the recurrence relation, , given .
Ch. 5.3 - Prob. 2ECh. 5.3 - Solve the recurrence relation, , given .
Ch. 5.3 - Solve the recurrence relation an+1=7an10an1, n2,...Ch. 5.3 - Prob. 5ECh. 5.3 - 6. Solve the recurrence relation, , given
Ch. 5.3 - 7. Solve the recurrence relation , , given .
Ch. 5.3 - 8. Solve the recurrence relation , , given ....Ch. 5.3 - 9. Solve the recurrence relation , , given ....Ch. 5.3 - 10. (a) Solve the recurrence relation , , given ....Ch. 5.3 - Prob. 11ECh. 5.3 - Prob. 12ECh. 5.3 - Solve the recurrence relation an=5an16an2, n2,...Ch. 5.3 - Prob. 14ECh. 5.3 - Prob. 15ECh. 5.3 - Solve the recurrence relation an=4an14an2+n, n2,...Ch. 5.3 - Prob. 17ECh. 5.3 - Prob. 18ECh. 5.3 - Prob. 19ECh. 5.3 - Prob. 20ECh. 5.3 - Prob. 21ECh. 5.3 - Prob. 22ECh. 5.3 - 23. The Towers of Hanoi is a popular puzzle. It...Ch. 5.3 - 24. Suppose we modify the traditional rules for...Ch. 5.3 - Prob. 25ECh. 5.3 - Prob. 26ECh. 5.3 - Prob. 27ECh. 5.4 - Prob. 1TFQCh. 5.4 - Prob. 2TFQCh. 5.4 - Prob. 3TFQCh. 5.4 - Prob. 4TFQCh. 5.4 - Prob. 5TFQCh. 5.4 - Prob. 6TFQCh. 5.4 - Prob. 7TFQCh. 5.4 - Prob. 8TFQCh. 5.4 - Prob. 9TFQCh. 5.4 - Prob. 10TFQCh. 5.4 - Prob. 1ECh. 5.4 - Prob. 2ECh. 5.4 - Prob. 3ECh. 5.4 - Prob. 4ECh. 5.4 - Prob. 5ECh. 5.4 - Prob. 6ECh. 5.4 - Prob. 7ECh. 5.4 - Prob. 8ECh. 5.4 - Prob. 9ECh. 5.4 - Prob. 10ECh. 5.4 - Prob. 11ECh. 5.4 - Prob. 12ECh. 5.4 - Prob. 13ECh. 5.4 - Prob. 14ECh. 5 - Use mathematical induction to show that...Ch. 5 - Using mathematical induction, show that
for all...Ch. 5 - Using mathematical induction, show that (112)n1n2...Ch. 5 - Prove that for all integers.
Ch. 5 - 5. Use mathematical induction to prove that is...Ch. 5 - 6. Prove that for all.
Ch. 5 - Prob. 7RECh. 5 - 8. (a) Give an example of a function with domaina...Ch. 5 - Give a recursive definition of each of the...Ch. 5 - Guess a simple formula for each of the following...Ch. 5 - 11. Consider the sequence defined by and for. What...Ch. 5 - 12. Find the sum.
Ch. 5 - 13. Let be defined recursively by and, for , ....Ch. 5 - Define f:ZZ by f(a)=34a, and for tZ define a...Ch. 5 - Consider the arithmetic sequence that begins...Ch. 5 - 16. The first two terms of a sequence are 6 and 2....Ch. 5 - 17. Let be the first four terms of an arithmetic...Ch. 5 - Explain why the sum of 500 terms of the series...Ch. 5 - 19. (a) Define the Fibonacci sequence.
(b) Is it...Ch. 5 - Show that, for n2, the nth term of the Fibonacci...Ch. 5 - Let f1,f2,....... be the Fibonacci sequence as...Ch. 5 - Suppose you walk up a flight of stairs one or two...Ch. 5 - 23. Solve the recurrence relation given that and...Ch. 5 - Solve Exercise 23 using the method of generating...Ch. 5 - 25. Find a formula for, given and for .
Ch. 5 - Let an be the sequence defined by a0=2,a1=1, and...Ch. 5 - Prob. 27RECh. 5 - Prob. 28RECh. 5 - Prob. 29RECh. 5 - 30. (For students of calculus) Let denote the...
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- This 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_forward5. [-/1 Points] DETAILS MY NOTES SESSCALCET2 6.5.AE.003. y y= ex² 0 Video Example x EXAMPLE 3 (a) Use the Midpoint Rule with n = 10 to approximate the integral कर L'ex² dx. (b) Give an upper bound for the error involved in this approximation. SOLUTION 8+2 1 L'ex² d (a) Since a = 0, b = 1, and n = 10, the Midpoint Rule gives the following. (Round your answer to six decimal places.) dx Ax[f(0.05) + f(0.15) + ... + f(0.85) + f(0.95)] 0.1 [0.0025 +0.0225 + + e0.0625 + 0.1225 e0.3025 + e0.4225 + e0.2025 + + e0.5625 €0.7225 +0.9025] The figure illustrates this approximation. (b) Since f(x) = ex², we have f'(x) = 0 ≤ f'(x) = < 6e. ASK YOUR TEACHER and f'(x) = Also, since 0 ≤ x ≤ 1 we have x² ≤ and so Taking K = 6e, a = 0, b = 1, and n = 10 in the error estimate, we see that an upper bound for the error is as follows. (Round your final answer to five decimal places.) 6e(1)3 e 24( = ≈arrow_forward1. Consider the following preference ballots: Number of voters Rankings 6 5 4 2 1st choice A DCB DC 2nd choice B B D 3rd choice DCBD 4th choice CA AAA For each of the four voting systems we have studied, determine who would win the election in each case. (Remember: For plurality with runoff, all but the top two vote-getters are simultaneously eliminated at the end of round 1.)arrow_forward
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