Discrete Mathematics with Graph Theory
3rd Edition
ISBN: 9780131679955
Author: Edgar G. Goodaire
Publisher: Prentice Hall
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Textbook Question
Chapter 7.2, Problem 17E
The answers to exercises marked [BB] can be found in the Back of the Book.
A student must answer exactly eight questions out of ten on a final examination.
[BB] In how many ways can she choose the questions to answer?
Repeat (a) if she must answer the first three questions.
[BB] Repeat (a) if she must answer at least three of the last five questions and at most four of the first five.
Repeat (a) if she must answer at least three of the last five questions.
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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…
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.
Chapter 7 Solutions
Discrete Mathematics with Graph Theory
Ch. 7.1 - True/False Questions 5!=120Ch. 7.1 - Prob. 2TFQCh. 7.1 - Prob. 3TFQCh. 7.1 - Prob. 4TFQCh. 7.1 - Prob. 5TFQCh. 7.1 - Prob. 6TFQCh. 7.1 - True/False Questions
7. An r-permutation of n...Ch. 7.1 - Prob. 8TFQCh. 7.1 - Prob. 9TFQCh. 7.1 - True/False Questions There are 4!=24 ways in which...
Ch. 7.1 - The answers to exercises marked [BB] can be found...Ch. 7.1 - The answers to exercises marked [BB] can be found...Ch. 7.1 - The answers to exercises marked [BB] can be found...Ch. 7.1 - The answers to exercises marked [BB] can be found...Ch. 7.1 - The answers to exercises marked [BB] can be found...Ch. 7.1 - The answers to exercises marked [BB] can be found...Ch. 7.1 - In how many ways can ten boys and four girls sit...Ch. 7.1 - Prob. 8ECh. 7.1 - Prob. 9ECh. 7.1 - Prob. 10ECh. 7.1 - The answers to exercises marked [BB] can be found...Ch. 7.1 - [BB] In how many ways can two couples, the...Ch. 7.1 - Repeat Exercise 12, assuming, in each part, that a...Ch. 7.1 - Prob. 14ECh. 7.1 - Prob. 15ECh. 7.1 - Prob. 16ECh. 7.1 - 17. (a) In how many numbers with seven distinct...Ch. 7.1 - Prob. 18ECh. 7.2 - True/False Questions
Ch. 7.2 - Prob. 2TFQCh. 7.2 - Prob. 3TFQCh. 7.2 - Prob. 4TFQCh. 7.2 - Prob. 5TFQCh. 7.2 - Prob. 6TFQCh. 7.2 - Prob. 7TFQCh. 7.2 - Prob. 8TFQCh. 7.2 - Prob. 9TFQCh. 7.2 - Prob. 1ECh. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - Prob. 3ECh. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - [BB] In how many ways can Tom, Billie, and Peter...Ch. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - 7. In a popular lottery known as Lotto 6/49, a...Ch. 7.2 - Prob. 8ECh. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - Prob. 11ECh. 7.2 - Prob. 12ECh. 7.2 - Prob. 13ECh. 7.2 - Prob. 14ECh. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - 16. The head of the Department of Mathematical...Ch. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - Prob. 18ECh. 7.2 - Prob. 19ECh. 7.2 - Prob. 20ECh. 7.2 - Prob. 21ECh. 7.2 - The answers to exercises marked [BB] can be found...Ch. 7.2 - Prob. 23ECh. 7.2 - Prob. 24ECh. 7.2 - Prob. 25ECh. 7.2 - Prob. 26ECh. 7.3 - Prob. 1TFQCh. 7.3 - Prob. 2TFQCh. 7.3 - Prob. 3TFQCh. 7.3 - Prob. 4TFQCh. 7.3 - Prob. 5TFQCh. 7.3 - Prob. 6TFQCh. 7.3 - Prob. 7TFQCh. 7.3 - Prob. 8TFQCh. 7.3 - Prob. 9TFQCh. 7.3 - Prob. 10TFQCh. 7.3 - Prob. 1ECh. 7.3 - Prob. 2ECh. 7.3 - Prob. 3ECh. 7.3 - Prob. 4ECh. 7.3 - [BB] A fair coin is tossed six times. Find the...Ch. 7.3 - Prob. 6ECh. 7.3 - The next two exercises refer to Lotto 6/49, a...Ch. 7.3 - 8. In Lotto 6/49, find the probability of...Ch. 7.3 - 9. [BB] A basket contains five red balls, four...Ch. 7.3 - Prob. 10ECh. 7.3 - [BB] Repeat Exercise 9 assuming the first ball...Ch. 7.3 - 12. Repeat Exercise 10 assuming the two balls are...Ch. 7.3 - Prob. 13ECh. 7.3 - Prob. 14ECh. 7.3 - Prob. 15ECh. 7.3 - Prob. 16ECh. 7.3 - Find the probability that an integer selected at...Ch. 7.3 - Prob. 18ECh. 7.3 - Prob. 19ECh. 7.3 - Prob. 20ECh. 7.3 - Prob. 21ECh. 7.3 - Prob. 22ECh. 7.3 - Prob. 23ECh. 7.3 - Prob. 24ECh. 7.3 - (See Exercise 11 of Section 7.1), find the...Ch. 7.3 - Prob. 26ECh. 7.3 - Prob. 27ECh. 7.3 - Prob. 28ECh. 7.3 - Prob. 29ECh. 7.3 - Prob. 30ECh. 7.3 - Prob. 31ECh. 7.3 - Prob. 32ECh. 7.4 - Prob. 1TFQCh. 7.4 - Prob. 2TFQCh. 7.4 - Prob. 3TFQCh. 7.4 - Prob. 4TFQCh. 7.4 - Prob. 5TFQCh. 7.4 - Prob. 6TFQCh. 7.4 - Prob. 7TFQCh. 7.4 - Prob. 8TFQCh. 7.4 - Prob. 9TFQCh. 7.4 - Prob. 10TFQCh. 7.4 - Prob. 1ECh. 7.4 - 2. If the die in Exercise 1 is tossed twice, find...Ch. 7.4 - Prob. 3ECh. 7.4 - Prob. 4ECh. 7.4 - Prob. 5ECh. 7.4 - Prob. 6ECh. 7.4 - [BB] A coin has P(H)=14. If it is tossed six times...Ch. 7.4 - The answers to exercises marked [BB] can be found...Ch. 7.4 - Prob. 9ECh. 7.4 - Prob. 10ECh. 7.4 - Prob. 11ECh. 7.4 - Prob. 12ECh. 7.4 - Prob. 13ECh. 7.4 - Prob. 14ECh. 7.4 - 15. A fair coin is tossed n times. Let A be the...Ch. 7.4 - Prob. 16ECh. 7.4 - Prob. 17ECh. 7.4 - Prob. 18ECh. 7.4 - Prob. 19ECh. 7.4 - Prob. 20ECh. 7.4 - Prob. 21ECh. 7.4 - 22. (a) Find the probability that everyone in a...Ch. 7.4 - Prob. 23ECh. 7.4 - Prob. 24ECh. 7.4 - [BB] Given 70P20=.3,40P50=.5, and 10P40=.9, find...Ch. 7.4 - [BB] The probability that two persons aged 20 and...Ch. 7.4 - Prob. 27ECh. 7.4 - Prob. 28ECh. 7.4 - 29. [BB] Consumers in the town of Trout River have...Ch. 7.4 - Prob. 30ECh. 7.4 - 31. A new three- screen cinema has just opened in...Ch. 7.5 - Prob. 1TFQCh. 7.5 - (Answers can be found in the back of the book.)
2....Ch. 7.5 - (Answers can be found in the back of the book.)...Ch. 7.5 - Prob. 4TFQCh. 7.5 - Prob. 5TFQCh. 7.5 - Prob. 6TFQCh. 7.5 - Prob. 7TFQCh. 7.5 - Prob. 8TFQCh. 7.5 - Prob. 9TFQCh. 7.5 - Prob. 10TFQCh. 7.5 - The answers to exercises marked [BB] can be found...Ch. 7.5 - Prob. 2ECh. 7.5 - Prob. 3ECh. 7.5 - Prob. 4ECh. 7.5 - Prob. 5ECh. 7.5 - 6. Twenty varieties of chocolates are available...Ch. 7.5 - Prob. 7ECh. 7.5 - The answers to exercises marked [BB] can be found...Ch. 7.5 - The answers to exercises marked [BB] can be found...Ch. 7.5 - Prob. 10ECh. 7.5 - 11. (a) [BB] In how many ways can ten red balls,...Ch. 7.5 - The answers to exercises marked [BB] can be found...Ch. 7.5 - Prob. 13ECh. 7.5 - Find the number of arrangements of the letters of...Ch. 7.5 - Prob. 15ECh. 7.5 - Prob. 16ECh. 7.5 - Show that there is a one-to-one correspondence...Ch. 7.5 - The answers to exercises marked [BB] can be found...Ch. 7.5 - Prob. 19ECh. 7.6 - (Answers can be found in the back of the book.)
1....Ch. 7.6 - Prob. 2TFQCh. 7.6 - Prob. 3TFQCh. 7.6 - Prob. 4TFQCh. 7.6 - Prob. 5TFQCh. 7.6 - Prob. 6TFQCh. 7.6 - (Answers can be found in the back of the book.)
7....Ch. 7.6 - Prob. 8TFQCh. 7.6 - Prob. 9TFQCh. 7.6 - Prob. 10TFQCh. 7.6 - Prob. 1ECh. 7.6 - Prob. 2ECh. 7.6 - Prob. 3ECh. 7.6 - Prob. 4ECh. 7.6 - Prob. 5ECh. 7.6 - Prob. 6ECh. 7.6 - [BB] In how many ways can the integers 1 through 9...Ch. 7.6 - Without any calculation, prove that...Ch. 7.6 - Prob. 9ECh. 7.6 - Prob. 10ECh. 7.6 - Prob. 11ECh. 7.6 - Prob. 12ECh. 7.7 - (Answers can be found in the back of the book.)
1....Ch. 7.7 - Prob. 2TFQCh. 7.7 - Prob. 3TFQCh. 7.7 - Prob. 4TFQCh. 7.7 - Prob. 5TFQCh. 7.7 - Prob. 6TFQCh. 7.7 - Prob. 7TFQCh. 7.7 - Prob. 8TFQCh. 7.7 - Prob. 9TFQCh. 7.7 - Prob. 10TFQCh. 7.7 - Prob. 1ECh. 7.7 - The answers to exercises marked [BB] can be found...Ch. 7.7 - Prob. 3ECh. 7.7 - Prob. 4ECh. 7.7 - Prob. 5ECh. 7.7 - Prob. 6ECh. 7.7 - Prob. 7ECh. 7.7 - Prob. 8ECh. 7.7 - Prob. 9ECh. 7.7 - Prob. 10ECh. 7.7 - Prob. 11ECh. 7.7 - Prob. 12ECh. 7.7 - Prob. 13ECh. 7.7 - Sequences of integers, {xn},{yn},n0, are defined...Ch. 7.7 - Prob. 15ECh. 7.7 - The answers to exercises marked [BB] can be found...Ch. 7.7 - Prob. 17ECh. 7.7 - 18. Prove the Binominal Theorem by mathematical...Ch. 7.7 - Prob. 19ECh. 7.7 - Prob. 20ECh. 7.7 - Prob. 21ECh. 7.7 - Prob. 22ECh. 7.7 - Prob. 23ECh. 7.7 - 24. There are n books in a line on a shelf and...Ch. 7.7 - Prob. 25ECh. 7 - Prove that 2nP(2n,n) for all integers n1.Ch. 7 - In how many ways can seven boys and six girls...Ch. 7 - Do Exercise 2 again with circle instead of row.Ch. 7 - How many permutations of the letters a, b, c, d,...Ch. 7 - 5. (a) In how many permutations of the 26...Ch. 7 - 6. Find an expression for the number of five-card...Ch. 7 - A committee of seven is to be chosen from eight...Ch. 7 - In how many ways can 12 people from four groups of...Ch. 7 - A car manufacturer is forced to admit that the...Ch. 7 - 10. Ten students find themselves in an...Ch. 7 - 11. For Christmas, Gail wants to buy each of her...Ch. 7 - 12. A Middle East peace conference will be...Ch. 7 - Prob. 13RECh. 7 - Frank wants to buy 12 muffins and finds seven...Ch. 7 - Twelve ships enter the St. Johns harbor one after...Ch. 7 - 16. A candy merchant carries bubble gum balls in...Ch. 7 - 17. In how many ways can the letters of the word...Ch. 7 - 18. In how many ways can five rings be put onto...Ch. 7 - Find the coefficient of x6 in (16x212x)12....Ch. 7 - Find the coefficient of x6 in (16x212x)12....Ch. 7 - 21. Prove that for any .
Ch. 7 - Give a verbal argument for the truth of the...Ch. 7 - 23. Find a simple expression for .
Ch. 7 - Show that (2nn) is even for all n1.Ch. 7 - On the day before midterm break, 20 of the 32...Ch. 7 - 26. A fair coin is tossed n times. Prove that...
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