DISCRETE MATHEMATICS WITH APPLICATION (
5th Edition
ISBN: 9780357097717
Author: EPP
Publisher: CENGAGE L
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Chapter 7.1, Problem 20ES
To determine
Use the definition of logarithm to prove that for any positive real number
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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 7 Solutions
DISCRETE MATHEMATICS WITH APPLICATION (
Ch. 7.1 - Given a function f from a set X to a set Y, f(x)...Ch. 7.1 - Given a function f from a set X to a set Y, if...Ch. 7.1 - Prob. 3TYCh. 7.1 - Given a function f then a set X to a set Y, if...Ch. 7.1 - Prob. 5TYCh. 7.1 - Prob. 6TYCh. 7.1 - Prob. 7TYCh. 7.1 - Prob. 8TYCh. 7.1 - Prob. 9TYCh. 7.1 - Prob. 1ES
Ch. 7.1 - Let X={1,3,5} and Y={a,b,c,d}. Define g:XY by the...Ch. 7.1 - Indicate whether the statement in parts (a)-(d)...Ch. 7.1 - a. Find all function from X={a,b}toY={u,v} . b....Ch. 7.1 - Let Iz be the identity function defined on the set...Ch. 7.1 - Find function defined on the sdet of nonnegative...Ch. 7.1 - Let A={1,2,3,4,5} , and define a function F:P(A)Z...Ch. 7.1 - Let Js={0,1,2,3,4} , and define a function F:JsJs...Ch. 7.1 - Define a function S:Z+Z+ as follows: For each...Ch. 7.1 - Prob. 10ESCh. 7.1 - Define F:ZZZZ as follows: For every ordered pair...Ch. 7.1 - Let JS={0,1,2,3,4} ,and define G:JsJsJsJs as...Ch. 7.1 - Let Js={0,1,2,3,4} , and define functions f:JsJs...Ch. 7.1 - Define functions H and K from R to R by the...Ch. 7.1 - Prob. 15ESCh. 7.1 - Let F and G be functions from the set of all real...Ch. 7.1 - Prob. 17ESCh. 7.1 - Find exact values for each of the following...Ch. 7.1 - Prob. 19ESCh. 7.1 - Prob. 20ESCh. 7.1 - If b is any positive real number with b1 and x is...Ch. 7.1 - Prob. 22ESCh. 7.1 - Prob. 23ESCh. 7.1 - If b and y are positivereal numbers such that...Ch. 7.1 - Let A={2,3,5} and B={x,y}. Let p1 and p2 be the...Ch. 7.1 - Observe that mod and div can be defined as...Ch. 7.1 - Let S be the set of all strings of as and bs....Ch. 7.1 - Consider the coding and decoding functions E and D...Ch. 7.1 - Consider the Hamming distance function defined in...Ch. 7.1 - Draw arrow diagram for the Boolean functions...Ch. 7.1 - Fill in the following table to show the values of...Ch. 7.1 - Cosider the three-place Boolean function f defined...Ch. 7.1 - Student A tries to define a function g:QZ by the...Ch. 7.1 - Student C tries to define a function h:QQ by the...Ch. 7.1 - Let U={1,2,3,4} . Student A tries to define a...Ch. 7.1 - Prob. 36ESCh. 7.1 - On certain computers the integer data type goed...Ch. 7.1 - Prob. 38ESCh. 7.1 - Prob. 39ESCh. 7.1 - Prob. 40ESCh. 7.1 - Prob. 41ESCh. 7.1 - In 41-49 let X and Y be sets, let A and B be any...Ch. 7.1 - Prob. 43ESCh. 7.1 - Prob. 44ESCh. 7.1 - Prob. 45ESCh. 7.1 - Prob. 46ESCh. 7.1 - Prob. 47ESCh. 7.1 - Prob. 48ESCh. 7.1 - Prob. 49ESCh. 7.1 - Prob. 50ESCh. 7.1 - Each of exercises 51-53 refers to the Euler phi...Ch. 7.1 - Prob. 52ESCh. 7.1 - Each of exercises 51-53 refers to the Euler phi...Ch. 7.2 - If F is a function from a set X to a set Y, then F...Ch. 7.2 - If F is a function from a set X to a set Y, then F...Ch. 7.2 - Prob. 3TYCh. 7.2 - Prob. 4TYCh. 7.2 - Prob. 5TYCh. 7.2 - Prob. 6TYCh. 7.2 - Prob. 7TYCh. 7.2 - Given a function F:XY , to prove that F is not one...Ch. 7.2 - Prob. 9TYCh. 7.2 - Prob. 10TYCh. 7.2 - Prob. 11TYCh. 7.2 - The definition of onr-to-one is stated in two...Ch. 7.2 - Fill in each blank with the word most or least. a....Ch. 7.2 - When asked to state the definition of one-to-one,...Ch. 7.2 - Let f:XY be a function. True or false? A...Ch. 7.2 - All but two of the following statements are...Ch. 7.2 - Let X={1,5,9} and Y={3,4,7} . a. Define f:XY by...Ch. 7.2 - Let X={a,b,c,d} and Y={e,f,g} . Define functions F...Ch. 7.2 - Let X={a,b,c} and Y={d,e,f,g} . Define functions H...Ch. 7.2 - Let X={1,2,3},Y={1,2,3,4} , and Z= {1,2} Define a...Ch. 7.2 - a. Define f:ZZ by the rule f(n)=2n, for every...Ch. 7.2 - Define F:ZZZZ as follows. For every ordered pair...Ch. 7.2 - a. Define F:ZZ by the rule F(n)=23n for each...Ch. 7.2 - a. Define H:RR by the rule H(x)=x2 , for each real...Ch. 7.2 - Explain the mistake in the following “proof.”...Ch. 7.2 - In each of 15-18 a function f is defined on a set...Ch. 7.2 - Prob. 16ESCh. 7.2 - Prob. 17ESCh. 7.2 - Prob. 18ESCh. 7.2 - Referring to Example 7.2.3, assume that records...Ch. 7.2 - Define Floor: RZ by the formula Floor (x)=x , for...Ch. 7.2 - Prob. 21ESCh. 7.2 - Let S be the set of all strings of 0’s and 1’s,...Ch. 7.2 - Define F:P({a,b,c})Z as follaws: For every A in...Ch. 7.2 - Les S be the set of all strings of a’s and b’s,...Ch. 7.2 - Let S be the et of all strings is a’s and b’s, and...Ch. 7.2 - Prob. 26ESCh. 7.2 - Let D be the set of all set of all finite subsets...Ch. 7.2 - Prob. 28ESCh. 7.2 - Define H:RRRR as follows: H(x,y)=(x+1,2y) for...Ch. 7.2 - Define J=QQR by the rule J(r,s)=r+2s for each...Ch. 7.2 - Prob. 31ESCh. 7.2 - a. Is log827=log23? Why or why not? b. Is...Ch. 7.2 - Prob. 33ESCh. 7.2 - The properties of logarithm established in 33-35...Ch. 7.2 - Prob. 35ESCh. 7.2 - Prob. 36ESCh. 7.2 - Prob. 37ESCh. 7.2 - Prob. 38ESCh. 7.2 - Prob. 39ESCh. 7.2 - Suppose F:XY is one—to—one. a. Prove that for...Ch. 7.2 - Suppose F:XY is into. Prove that for every subset...Ch. 7.2 - Prob. 42ESCh. 7.2 - Prob. 43ESCh. 7.2 - In 44-55 indicate which of the function in the...Ch. 7.2 - In 44-55 indicate which of the function in the...Ch. 7.2 - Prob. 46ESCh. 7.2 - Prob. 47ESCh. 7.2 - Prob. 48ESCh. 7.2 - Prob. 49ESCh. 7.2 - Prob. 50ESCh. 7.2 - Prob. 51ESCh. 7.2 - Prob. 52ESCh. 7.2 - Prob. 53ESCh. 7.2 - Prob. 54ESCh. 7.2 - Prob. 55ESCh. 7.2 - Prob. 56ESCh. 7.2 - Write a computer algorithm to check whether a...Ch. 7.2 - Write a computer algorithm to check whether a...Ch. 7.3 - If f is a function from X to Y’,g is a function...Ch. 7.3 - Prob. 2TYCh. 7.3 - If f is a one-to=-one correspondence from X to Y....Ch. 7.3 - Prob. 4TYCh. 7.3 - Prob. 5TYCh. 7.3 - Prob. 1ESCh. 7.3 - In each of 1 and 2, functions f and g are defined...Ch. 7.3 - In 3 and 4, functions F and G are defined by...Ch. 7.3 - In 3 and 4, functions F and G are defined by...Ch. 7.3 - Define f:RR by the rule f(x)=x for every real...Ch. 7.3 - Define F:ZZ and G:ZZ . By the rules F(a)=7a and...Ch. 7.3 - Define L:ZZ and M:ZZ by the rules L(a)=a2 and...Ch. 7.3 - Let S be the set of all strings in a’s and b’s and...Ch. 7.3 - Define F:RR and G:RZ by the following formulas:...Ch. 7.3 - Prob. 10ESCh. 7.3 - Define F:RR and G:RR by the rules F(n)=3x and...Ch. 7.3 - The functions of each pair in 12—14 are inverse to...Ch. 7.3 - G:R+R+ and G1:RR+ are defined by G(x)=x2andG1(x)=x...Ch. 7.3 - H and H-1 are both defined from R={1} to R-{1} by...Ch. 7.3 - Explain how it follows from the definition of...Ch. 7.3 - Prove Theorem 7.3.1(b): If f is any function from...Ch. 7.3 - Prove Theorem 7.3.2(b): If f:XY is a one-to-one...Ch. 7.3 - Prob. 18ESCh. 7.3 - If + f:XY and g:YZ are functions and gf is...Ch. 7.3 - If f:XY and g:YZ are function and gf is onto, must...Ch. 7.3 - Prob. 21ESCh. 7.3 - If f:XY and g:YZ are functions and gf is onto,...Ch. 7.3 - Prob. 23ESCh. 7.3 - Prob. 24ESCh. 7.3 - Prob. 25ESCh. 7.3 - In 26 and 27 find (gf)1,g1,f1, and f1g1 , and...Ch. 7.3 - In 26 and 27 find (gf)1,g1,f1 , and f1g1 by the...Ch. 7.3 - Prob. 28ESCh. 7.3 - Suppose f:XY and g:YZ are both one-to-one and...Ch. 7.3 - Prob. 30ESCh. 7.4 - A set is finite if, and only if,________Ch. 7.4 - Prob. 2TYCh. 7.4 - The reflexive property of cardinality says that...Ch. 7.4 - The symmetric property of cardinality says that...Ch. 7.4 - The transitive property of cardinality say that...Ch. 7.4 - Prob. 6TYCh. 7.4 - Prob. 7TYCh. 7.4 - Prob. 8TYCh. 7.4 - Prob. 9TYCh. 7.4 - Prob. 1ESCh. 7.4 - Show that “there are as many squares as there are...Ch. 7.4 - Let 3Z={nZn=3k,forsomeintegerk} . Prove that Z and...Ch. 7.4 - Let O be the set of all odd integers. Prove that O...Ch. 7.4 - Let 25Z be the set of all integers that are...Ch. 7.4 - Prob. 6ESCh. 7.4 - Prob. 7ESCh. 7.4 - Use the result of exercise 3 to prove that 3Z is...Ch. 7.4 - Show that the set of all nonnegative integers is...Ch. 7.4 - In 10-14 s denotes the sets of real numbers...Ch. 7.4 - Prob. 11ESCh. 7.4 - In 10-14 S denotes the set of real numbers...Ch. 7.4 - Prob. 13ESCh. 7.4 - Prob. 14ESCh. 7.4 - Show that the set of all bit string (string of 0’s...Ch. 7.4 - Prob. 16ESCh. 7.4 - Prob. 17ESCh. 7.4 - Must the average of two irrational numbers always...Ch. 7.4 - Prob. 19ESCh. 7.4 - Give two examples of functions from Z to Z that...Ch. 7.4 - Give two examples of function from Z to Z that are...Ch. 7.4 - Define a function g:Z+Z+Z+ by the formula...Ch. 7.4 - âa. Explain how to use the following diagram to...Ch. 7.4 - Prob. 24ESCh. 7.4 - Prob. 25ESCh. 7.4 - Prove that any infinite set contain a countable...Ch. 7.4 - Prove that if A is any countably infinite set, B...Ch. 7.4 - Prove that a disjoint union of any finite set and...Ch. 7.4 - Prove that a union of any two countably infinite...Ch. 7.4 - Prob. 30ESCh. 7.4 - Use the results of exercise 28 and 29 to prove...Ch. 7.4 - Prove that ZZ , the Cartesian product of the set...Ch. 7.4 - Prob. 33ESCh. 7.4 - Let P(s) be the set of all subsets of set S, and...Ch. 7.4 - Prob. 35ESCh. 7.4 - Prob. 36ESCh. 7.4 - Prove that if A and B are any countably infinite...Ch. 7.4 - Prob. 38ES
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