HEART OF MATHEMATICS
HEART OF MATHEMATICS
4th Edition
ISBN: 9781119760061
Author: Burger
Publisher: WILEY
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Chapter 6.3, Problem 37MS
To determine

To find: The number of vertices, edges and the regions.

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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 6 Solutions

HEART OF MATHEMATICS

Ch. 6.1 - Path-o-rama. For each graph below, determine if...Ch. 6.1 - Walk around the block. Create a graph of the...Ch. 6.1 - Walking the dogs. Your dogs, Abbey and Bear, love...Ch. 6.1 - Delivery query. The next time you see a postal...Ch. 6.1 - Snow job. (ExH) Shown here is a map of the tiny...Ch. 6.1 - Special delivery. (ExH) Julia is the letter...Ch. 6.1 - Draw this old house. Suppose you wanted to trace...Ch. 6.1 - Path of no return. Consider this map showing a...Ch. 6.1 - Without a trace. Is it possibel to trace out...Ch. 6.1 - New Euler. In the three previous Mindscapes, you...Ch. 6.1 - New edge—new circuit. Look at the graph for...Ch. 6.1 - New edge—new path. Review your work for...Ch. 6.1 - Path to proof. Suppose you have a connected graph...Ch. 6.1 - No Euler no how. Look at graph (a) for Mindscape...Ch. 6.1 - Degree day. (S) For cach graph below, determine...Ch. 6.1 - degrees of proof. Review your work for Mindscape...Ch. 6.1 - Degrees in sequence. Can you draw a graph that has...Ch. 6.1 - Even Steven. Review your work in Mindscape 28 to...Ch. 6.1 - Little League lesson. (H) You are in charge of...Ch. 6.1 - With a group of folks. In a small group, discuss...Ch. 6.1 - Power beyond the mathematics. Provide several...Ch. 6.1 - Here we celebrate the power of algebra as a...Ch. 6.1 - Here we celebrate the power of algebra as a...Ch. 6.1 - Here we celebrate the power of algebra as a...Ch. 6.1 - Here we celebrate the power of algebra as a...Ch. 6.1 - Here we celebrate the power of algebra as a...Ch. 6.2 - What a character! What expression gives the Euler...Ch. 6.2 - Count, then verify. What are the values of V, E,...Ch. 6.2 - Sneeze, then verify. Look at an unopened tissue...Ch. 6.2 - Blow, then verify. Inflate a ballon and use a...Ch. 6.2 - Add one. Find the values V, E, and F for the graph...Ch. 6.2 - Bowling. What is the Euler Characteristic of the...Ch. 6.2 - Making change. We begin with the graph pictured at...Ch. 6.2 - Making a point. Take a connected graph and add a...Ch. 6.2 - On the edge (H). Is it possible to add an edge to...Ch. 6.2 - Soap films. Consider the following sequence of...Ch. 6.2 - Dualing. What is the relationship between the...Ch. 6.2 - Prob. 12MSCh. 6.2 - Lots of separation. Suppose we are told that a...Ch. 6.2 - Prob. 14MSCh. 6.2 - Psychic readings. Someone is thinking of a...Ch. 6.2 - Prob. 16MSCh. 6.2 - Prob. 17MSCh. 6.2 - Circular reasoning. Create a connected graph as...Ch. 6.2 - Prob. 19MSCh. 6.2 - More circles. Consider the sphere described in...Ch. 6.2 - In the rough (S). Count the number of facets,...Ch. 6.2 - Cutting corners (H). The following collection of...Ch. 6.2 - Stellar. The following collection of pictures...Ch. 6.2 - A torus graph (ExH). The Euler Characteristic...Ch. 6.2 - Regular unfolding. Each graph below represents...Ch. 6.2 - A tale of two graphs. Suppose we draw a graph that...Ch. 6.2 - Two graph conjectures (S). Can you conjecture a...Ch. 6.2 - Lots of graphs conjecture. Can you conjecture a...Ch. 6.2 - Torus count. Three hollowed, triangular prisms...Ch. 6.2 - Torus two count (H). Carefully count the number of...Ch. 6.2 - Torus many count. Using the preceding calculations...Ch. 6.2 - Prob. 32MSCh. 6.2 - Tell the truth. Someone said that she made a...Ch. 6.2 - No sphere. Suppose we have a sphere built out of...Ch. 6.2 - Soccer ball. A soccer ball is made of pentagons...Ch. 6.2 - Klein bottle. Using the diagram here for building...Ch. 6.2 - Not many neighbors. Show that every map has at...Ch. 6.2 - Infinite edges. Suppose we consider a conn ected...Ch. 6.2 - Here we celebrate the power of algebra as a...Ch. 6.2 - Prob. 44MSCh. 6.2 - Prob. 45MSCh. 6.2 - Here we celebrate the power of algebra as a...Ch. 6.2 - Here we celebrate the power of algebra as a...Ch. 6.3 - Dont be cross. Here is a drawing of a graph with...Ch. 6.3 - De Plane! De Plane! (S) Is the graph given in...Ch. 6.3 - Countdown (H). For the graph drawing shown, count...Ch. 6.3 - Prob. 4MSCh. 6.3 - Criss-Cross. Is it possible to redraw the graph...Ch. 6.3 - Dont cross in the edge. Each of the graphs drawn...Ch. 6.3 - Hot crossed buns. Each of the graphs drawn below...Ch. 6.3 - Prob. 8MSCh. 6.3 - Spider on a mirror. Is it possible to redraw the...Ch. 6.3 - One more vertex. The graph here is drawn to show...Ch. 6.3 - Yet one more vertex (H). The graph shown is drawn...Ch. 6.3 - Familiar freckles. Is it possible to redraw the...Ch. 6.3 - Remind you of anyone you know? Is it possible to...Ch. 6.3 - Final countdown. For this graph drawing, count the...Ch. 6.3 - Euler check-up. Use your answer to the previous...Ch. 6.3 - Euler second opinion. For the graph drawing shown...Ch. 6.3 - Prob. 17MSCh. 6.3 - Prob. 18MSCh. 6.3 - A colorful museum. This figure shows the floor...Ch. 6.3 - Limit of 5. Start drawing a planar graph. Keep...Ch. 6.3 - Starring the hexagon. Is it possible to redraw...Ch. 6.3 - Prob. 22MSCh. 6.3 - Prob. 23MSCh. 6.3 - Getting greedy. (H) Suppose you are asked to color...Ch. 6.3 - Stingy rather than greedy. By coloring the...Ch. 6.3 - Getting more colorful. Graphs dont have to be...Ch. 6.3 - Prob. 27MSCh. 6.3 - Prob. 28MSCh. 6.3 - Chromatically applied. There are eight radio...Ch. 6.3 - Prob. 30MSCh. 6.3 - Personal perspectives. Write a short essay...Ch. 6.3 - Here we celebrate the power of algebra as a...Ch. 6.3 - Here we celebrate the power of algebra as a...Ch. 6.3 - Prob. 37MSCh. 6.3 - Here we celebrate the power of algebra as a...Ch. 6.3 - Here we celebrate the power of algebra as a...Ch. 6.4 - Up close and personal. Create a graph to model...Ch. 6.4 - Network lookout. Find an examle of a network...Ch. 6.4 - Prob. 3MSCh. 6.4 - Hamiltonian holiday (S). You are interning for a...Ch. 6.4 - Home style. Create a graph to model the rooms in...Ch. 6.4 - Six degrees or less. Suppose this graph is a model...Ch. 6.4 - Degrees of you. Find ten willing friends or...Ch. 6.4 - Campus shortcut. Find a map of your campus and...Ch. 6.4 - Arborist lesson. Which of the graphs below are...Ch. 6.4 - Prob. 10MSCh. 6.4 - Prob. 11MSCh. 6.4 - Prob. 12MSCh. 6.4 - Prob. 13MSCh. 6.4 - Prob. 14MSCh. 6.4 - Prob. 15MSCh. 6.4 - Hamilton Study. Look at the graph you drew to...Ch. 6.4 - Business trip redux. Look back in the section and...Ch. 6.4 - Handling Hamiltons. For each graph below, find a...Ch. 6.4 - Road trip. You are checking out gradua te programs...Ch. 6.4 - Back to Hatties trip. Look back in this section...Ch. 6.4 - Solve the Icosian Game. Find a Hamiltonian circuit...Ch. 6.4 - Hunt for Hamilton (S). A large island country has...Ch. 6.4 - Has no Hamilton. Give some characteristics that...Ch. 6.4 - Cubing Hamilton (ExH). Can you find a Hamihonian...Ch. 6.4 - Hamiltonian path. A Hamiltonian path is a path in...Ch. 6.4 - Sorry, no path. Give some characteristics that...Ch. 6.4 - Prob. 27MSCh. 6.4 - Prob. 28MSCh. 6.4 - Prob. 29MSCh. 6.4 - Prob. 30MSCh. 6.4 - Edge count. Look at all the trees you drew in the...Ch. 6.4 - Personal perspecthes. Write a short essay...Ch. 6.4 - Prob. 33MSCh. 6.4 - Prob. 34MSCh. 6.4 - Dollars and cents. Your spanning tree has three...Ch. 6.4 - Adding up. Your spanning tree has four edges with...Ch. 6.4 - Prob. 38MSCh. 6.4 - Vertex search (H). Your graph has a Hamiltonian...Ch. 6.4 - Binary gossip tree. You told a secret to two of...
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