HEART OF MATHEMATICS
4th Edition
ISBN: 9781119760061
Author: Burger
Publisher: WILEY
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Chapter 5.4, Problem 3MS
Fixed flapjacks. You’re making pancakes and thinking, as always, of the Brouwer Fixed Point Theorem. You flip over one of your perfectly circular pancakes so that it falls back exactly onto its original place on the griddle. What point or points of the pancake are in the exact same position they were in before the flip?
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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 5 Solutions
HEART OF MATHEMATICS
Ch. 5.1 - Describing distortion. What does it mean to say...Ch. 5.1 - Your last sheet. Youre in your bathroom reading...Ch. 5.1 - Rubber polygons. Find a large rubber band and...Ch. 5.1 - Out, out red spot. Remove the red spot from the...Ch. 5.1 - That theta (S). Does there exist a pair of points...Ch. 5.1 - Your ABCs (H). Consider the following letters made...Ch. 5.1 - Half dollar and a straw. Suppose we drill a hole...Ch. 5.1 - Drop them. Is it possible to take off your...Ch. 5.1 - Coffee and doughnuts (H). Is a standard coffee mug...Ch. 5.1 - Lasting ties. Tie a thin rope around a friends...
Ch. 5.1 - Will you spill? (S). Suppose you rest a glass of...Ch. 5.1 - Grabbing the brass ring. Suppose a string attached...Ch. 5.1 - Hair care. Is a regular comb equivalent by...Ch. 5.1 - Three two-folds. Take three pieces of paper and...Ch. 5.1 - Equivalent objects. Group the objects in this...Ch. 5.1 - Clips. Is a paper clip equivalent to a circle? If...Ch. 5.1 - Pennies plus. Consider the two objects pictured...Ch. 5.1 - Starry-eyed. Consider the two stars below. Are...Ch. 5.1 - Learning the ropes. Pictured below are two ropes,...Ch. 5.1 - HoIy spheres. Consider the two spheres shown. Each...Ch. 5.1 - From sphere to torus. The following sequence of...Ch. 5.1 - Half full, half empty. One glass is half filled...Ch. 5.1 - Male versus female. Consider the male and female...Ch. 5.1 - Holey tori. Are these two objects equivalent by...Ch. 5.1 - More holey tori (H). Are these two objects...Ch. 5.1 - Last holey tori. Are these two objects equivalent...Ch. 5.1 - Beyond the holey inner tube. Suppose you are given...Ch. 5.1 - Heavy metal. Carefully examine this picture of a...Ch. 5.1 - The disk and the inner tube (ExH). Suppose you...Ch. 5.1 - Building a torus (S). Suppose you are given a...Ch. 5.1 - Lasso that hole. Consider the first two tori on...Ch. 5.1 - Knots in dougtnuts. We are given two solid...Ch. 5.1 - From knots to glasses (ExH). Take the thickened...Ch. 5.1 - More Jell-O. Suppose we take a cube of Jell-O,...Ch. 5.1 - Fixed spheres (H). We are given two spheres made...Ch. 5.1 - Holes. Is a torus equivalent to a two-holed torus?...Ch. 5.1 - More holes. Is a two-holed torus equivalent to a...Ch. 5.1 - Here we celebrate the power of algebra as a...Ch. 5.1 - Here we celebrate the power of algebra as a...Ch. 5.1 - Here we celebrate the power of algebra as a...Ch. 5.1 - Here we celebrate the power of algebra as a...Ch. 5.1 - Here we celebrate the power of algebra as a...Ch. 5.2 - One side to every story. What is a Mobius band?Ch. 5.2 - Maybe Mobius. How can you look at a loop of paper...Ch. 5.2 - Singin the blues. Take an ordinary strip of white...Ch. 5.2 - Whos blue now? Take an ordinary strip of white...Ch. 5.2 - Twisted sister. Your sister holds a strip of...Ch. 5.2 - Two twists. Take a strip of paper, put two half...Ch. 5.2 - Two twists again. Take a strip of paper, put two...Ch. 5.2 - Three twists (H). Take a strip of paper, put three...Ch. 5.2 - Prob. 11MSCh. 5.2 - Möbius lengths. Use the edge identification...Ch. 5.2 - Squash and cut. Take a Möbius band and squash it...Ch. 5.2 - Two at once. Take two strips of paper and put them...Ch. 5.2 - Parallel Möbius. Is it possible to have two...Ch. 5.2 - Puzzling. Suppose you have a collection of jigsaw...Ch. 5.2 - Möbius triangle. Make a 1-inch-wide Möbius band,...Ch. 5.2 - Thickened Möbius. Imagine a Möbius band...Ch. 5.2 - Thickened faces. How many faces (sides) does a...Ch. 5.2 - Thick then thin. Suppose we take a Môbius band,...Ch. 5.2 - Drawing the band (ExH). Imagine you have a Möbius...Ch. 5.2 - Tubing (H). Suppose we take two Möbius bands and...Ch. 5.2 - Bug out (ExH). Suppose you are a ladybug on the...Ch. 5.2 - Open cider. Consider the Klein bottle half filled...Ch. 5.2 - Rubber Klein (S). Suppose you have a rectangular...Ch. 5.2 - One edge. Using the method on page 347 for...Ch. 5.2 - Twist of fate (S). Using the edge-identification...Ch. 5.2 - Linked together. Using the edge-identification...Ch. 5.2 - Count twists. Using the edge-identification...Ch. 5.2 - Dont cross. Can you draw a curve that does not...Ch. 5.2 - Twisted up (H). Suppose you are given a band of...Ch. 5.2 - Prob. 32MSCh. 5.2 - Find a band. Find a Möbius band on the surface of...Ch. 5.2 - Holy Klein. Show that the figure on the left is...Ch. 5.2 - Möbius Möbius. Show that the Klein bottle is two...Ch. 5.2 - Attaching tubes. Consider a Möbius band with two...Ch. 5.2 - Möbius map (H). Using felt-tip color pens that...Ch. 5.2 - Thick slices. Thicken a Môbius band and then...Ch. 5.2 - Bagel slices. If we take a bagel and slice it in...Ch. 5.2 - Gluing and cutting. Consider a rectangular sheet...Ch. 5.2 - Here we celebrate the power of algebra as a...Ch. 5.2 - Here we celebrate the power of algebra as a...Ch. 5.2 - Here we celebrate the power of algebra as a...Ch. 5.2 - Here we celebrate the power of algebra as a...Ch. 5.2 - Here we celebrate the power of algebra as a...Ch. 5.3 - Knotty start. Which of the followign knots are...Ch. 5.3 - The not knot. What is the unknot?Ch. 5.3 - Crossing count. Count the crossings in each knot...Ch. 5.3 - Tangled up. Is the figure below a knot or a link?Ch. 5.3 - Ringing endorsement. What are the Borromean rings?Ch. 5.3 - Human trefoil. What is the minimum number of...Ch. 5.3 - Human figure eight. What is the minimum number of...Ch. 5.3 - Stick number (ExH). What is the smallest number...Ch. 5.3 - More Möbius. Make a Möbius band with three half...Ch. 5.3 - Slinky (H). Take a Slinky, lengthen one of its...Ch. 5.3 - More slink. Take a Slinky, and this time weave an...Ch. 5.3 - Make it. Use a piece of string or an extenstion...Ch. 5.3 - Knotted (S). Take an unknotted loop. Tie a knot in...Ch. 5.3 - Slip. Take an unknotted loop and put a slip knot...Ch. 5.3 - Dollar link. Take two paper clips and a dollar and...Ch. 5.3 - Prob. 18MSCh. 5.3 - Unknotting knots (H). In each of the two knots at...Ch. 5.3 - Alternating. A picture of a knot is alternating...Ch. 5.3 - Making it alternating. Consider the knot on the...Ch. 5.3 - Prob. 22MSCh. 5.3 - One cross (H). Prove that any loop with exactly...Ch. 5.3 - Two loops (S). Is there a picture of two linked...Ch. 5.3 - Hold the phone. Disconnect the wire from the phone...Ch. 5.3 - More unknotting knots. In these two knots, find...Ch. 5.3 - Unknotting pictures (S). Suppose you are given a...Ch. 5.3 - Twisted. Suppose we are given a figure consisting...Ch. 5.3 - More alternating. First reread Mindscape 20. For...Ch. 5.3 - Crossing numbers. Suppose you are given pictures...Ch. 5.3 - Lots of crossings. Suppose you arc given a picture...Ch. 5.3 - Torus knots (H). Can you draw a trefoil knot on a...Ch. 5.3 - Two crosses. Prove that any loop with exactly two...Ch. 5.3 - Hoop it up. Show that every knot can be positioned...Ch. 5.3 - The switcheroo. Pictured below is a way of...Ch. 5.3 - 4D washout. Why is the study of knots and links...Ch. 5.3 - Brunnian links (H). Link four loops together in...Ch. 5.3 - Fire drill (ExH). A fire starts in your...Ch. 5.3 - Fixed spheres again. We are given two spheres that...Ch. 5.3 - Here we celebrate the power of algebra as a...Ch. 5.3 - Here we celebrate the power of algebra as a...Ch. 5.3 - Here we celebrate the power of algebra as a...Ch. 5.3 - Here we celebrate the power of algebra as a...Ch. 5.3 - Here we celebrate the power of algebra as a...Ch. 5.4 - Fixed things first. What does the Brouwer Fixed...Ch. 5.4 - Say cheese. Youre making an open-faced cheese...Ch. 5.4 - Fixed flapjacks. Youre making pancakes and...Ch. 5.4 - Prob. 4MSCh. 5.4 - Loop around. What does the Hot Loop Theorem...Ch. 5.4 - Fixed on a square. Does the Brouwer Fixed Point...Ch. 5.4 - Fixed on a circle. Does the Brouwer Fixed Point...Ch. 5.4 - Winding arrows. In each drawing below we have a...Ch. 5.4 - Prob. 10MSCh. 5.4 - Prob. 11MSCh. 5.4 - Home heating (H). Prove that there are two points...Ch. 5.4 - Prob. 13MSCh. 5.4 - Prob. 14MSCh. 5.4 - Prob. 15MSCh. 5.4 - Lining up (H). Suppose we have two line segments...Ch. 5.4 - A nice temp. Must there be two antipodal points on...Ch. 5.4 - Prob. 18MSCh. 5.4 - Diet drill. Suppose someone weighs 160 lbs. and...Ch. 5.4 - Speedy (S). You enter a tollway and are given a...Ch. 5.4 - The cut core. Suppose we have the red and blue...Ch. 5.4 - Fixed without boundary. Do you think that the...Ch. 5.4 - Take a hike (ExH). A hiker decides to climb up...Ch. 5.4 - Here we celebrate the power of algebra as a...Ch. 5.4 - Here we celebrate the power of algebra as a...Ch. 5.4 - Here we celebrate the power of algebra as a...Ch. 5.4 - Here we celebrate the power of algebra as a...Ch. 5.4 - Here we celebrate the power of algebra as a...
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