Prealgebra (6th Edition)
6th Edition
ISBN: 9780134179018
Author: Jamie Blair, John Tobey Jr., Jeffrey Slater, Jenny Crawford
Publisher: PEARSON
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Textbook Question
Chapter B, Problem 51E
Which of the following represents a unit that is larger than a gram?
dg or kg
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For each month of the year, Taylor collected the average high temperatures in Jackson, Mississippi. He used the data to create the histogram shown. Which set of data did he use to create the histogram?
A
55, 60, 64, 72, 73, 75, 77, 81, 83, 91, 91, 92\ 55,\ 60,\ 64,\ 72,\ 73,\ 75,\ 77,\ 81,\ 83,\ 91,\ 91,\ 92 55, 60, 64, 72, 73, 75, 77, 81, 83, 91, 91, 92
B
55, 57, 60, 65, 70, 71, 78, 79, 85, 86, 88, 91\ 55,\ 57,\ 60,\ 65,\ 70,\ 71,\ 78,\ 79,\ 85,\ 86,\ 88,\ 91 55, 57, 60, 65, 70, 71, 78, 79, 85, 86, 88, 91
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55, 58, 60, 66, 68, 75, 77, 82, 86, 89, 91, 91\ 55,\ 58,\ 60,\ 66,\ 68,\ 75,\ 77,\ 82,\ 86,\ 89,\ 91,\ 91 55, 58, 60, 66, 68, 75, 77, 82, 86, 89, 91, 91
In this problem, we consider a Brownian motion (W+) t≥0. We consider a stock model (St)t>0
given (under the measure P) by
d.St 0.03 St dt + 0.2 St dwt,
with So 2. We assume that the interest rate is r = 0.06. The purpose of this problem is to
price an option on this stock (which we name cubic put). This option is European-type, with
maturity 3 months (i.e. T = 0.25 years), and payoff given by
F = (8-5)+
(a) Write the Stochastic Differential Equation satisfied by (St) under the risk-neutral measure
Q. (You don't need to prove it, simply give the answer.)
(b) Give the price of a regular European put on (St) with maturity 3 months and strike K = 2.
(c) Let X =
S. Find the Stochastic Differential Equation satisfied by the process (Xt)
under the measure Q.
(d) Find an explicit expression for X₁ = S3 under measure Q.
(e) Using the results above, find the price of the cubic put option mentioned above.
(f) Is the price in (e) the same as in question (b)? (Explain why.)
Problem 4. Margrabe formula and the Greeks (20 pts)
In the homework, we determined the Margrabe formula for the price of an option allowing you to
swap an x-stock for a y-stock at time T. For stocks with initial values xo, yo, common volatility
σ and correlation p, the formula was given by
Fo=yo (d+)-x0Þ(d_),
where
In (±²
Ꭲ
d+
õ√T
and
σ = σ√√√2(1 - p).
дго
(a) We want to determine a "Greek" for ỡ on the option: find a formula for
θα
(b) Is
дго
θα
positive or negative?
(c) We consider a situation in which the correlation p between the two stocks increases: what
can you say about the price Fo?
(d) Assume that yo< xo and p = 1. What is the price of the option?
Chapter B Solutions
Prealgebra (6th Edition)
Ch. B - Fill in the blanks. 1mi=ftCh. B - Fill in the blanks. 1ft=in.Ch. B - Prob. 3ECh. B - Fill in the blanks. 1qt=galCh. B - Prob. 5ECh. B - Prob. 6ECh. B - Fill in the blanks. 60sec=minCh. B - Prob. 8ECh. B - Prob. 9ECh. B - Prob. 10E
Ch. B - Fill in the blanks. 2gal=qtCh. B - Prob. 12ECh. B - Prob. 13ECh. B - Fill in the blanks. 9ft=ydCh. B - Fill in the blanks. 2mi=ftCh. B - Prob. 16ECh. B - Fill in the blanks. 120sec=minCh. B - Prob. 18ECh. B - Prob. 19ECh. B - Fill in the blanks. 4pt=qtCh. B - Prob. 21ECh. B - Prob. 22ECh. B - Prob. 23ECh. B - Prob. 24ECh. B - Perform the operation indicated. 5ft4in.+4ft3in.Ch. B - Prob. 26ECh. B - Perform the operation indicated. 12ft7in.+3ft8in.Ch. B - Prob. 28ECh. B - Perform the operation indicated. 26yd1ft9yd2ftCh. B - Perform the operation indicated. 14yd6ft6yd2ftCh. B - While golfing, Todd made birdie putts of 4 ft 3...Ch. B - Jessica worked out at the health spa for 2 hr 20...Ch. B - Natalie bought a 1-pint can of tomato sauce. She...Ch. B - Joel has 1 quart of milk. If he uses 1 pint to...Ch. B - It takes Isaac 2 hours to detail a car. Sean can...Ch. B - A 3-pound can of Joes Chili costs the same price...Ch. B - Write the abbreviation for each metric unit....Ch. B - Prob. 38ECh. B - Write the abbreviation for each metric unit....Ch. B - Prob. 40ECh. B - Write the abbreviation for each metric unit....Ch. B - Prob. 42ECh. B - Prob. 43ECh. B - Place the appropriate symbol, or, in the blanks....Ch. B - Prob. 45ECh. B - Place the appropriate symbol, or, in the blanks....Ch. B - Prob. 47ECh. B - Place the appropriate symbol, or, in the blanks....Ch. B - Which of the following represents a unit that is...Ch. B - Which of the following represents a unit that is...Ch. B - Which of the following represents a unit that is...Ch. B - Which of the following represents a unit that is...Ch. B - Place the appropriate symbol, or, in the blanks....Ch. B - Place the appropriate symbol, or, in the blanks....Ch. B - Prob. 55ECh. B - Place the appropriate symbol, or, in the blanks....Ch. B - Place the appropriate symbol, or, in the blanks....Ch. B - Prob. 58ECh. B - Fill in the blanks. The _______ is the basic...Ch. B - Prob. 60ECh. B - Prob. 61ECh. B - Fill in the blanks. The gram is the basic metric...Ch. B - Prob. 63ECh. B - Lisa measured the width of a doorway. Choose the...Ch. B - Choose the unit of measure that best completes the...Ch. B - Choose the unit of measure that best completes the...Ch. B - Use the figure to the right for exercises 67 and...Ch. B - Use the figure to the right for exercises 67 and...Ch. B - Use the following information to answer exercises...Ch. B - Use the following information to answer exercises...
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