if u can answer the first question it would be helpful. Thank you. 2. Consider a trader with initial fund given by To = 15, and the transaction cost function ofholding q shares of stock i is C(q) = 10 + q². The price (x;) at which this trader sells itsposition is stochastically distributed according to the following probability distribution:J0.5, if a; = $8P(x;) =0.5, if x; = $2Let a random variable îñ be the profit of trading at each time t, t = 1, 2, ...,T,....1(a)If the trader's utility function is given byu(t) = M(#) - 당(%).where u(:) is the mean and o(-) is the variance, determine the trader's optimallevel of position, and the associated equilibrium profits from liquidate the completeposition.

Consumers' satisfaction or enjoyment with a product or service is represented by its usefulness.…

2. Consider a trader with initial fund given by To = 15, and the transaction cost function of holding q shares of stock i is C(q) = 10 + q². The price (x₂) at which this trader sells its position is stochastically distributed according to the following probability distribution: (0.5, 0.5, if x₂ = $2 if x₁ = $8 Let a random variable ♬ be the profit of trading at each time t, t = 1, 2, …, T, (a) If the trader's utility function is given by 1 u(ñ) = µ(ñ) — -—-0(ñ), P(x₁) = where μ() is the mean and o() is the variance, determine the trader's optimal level of position, and the associated equilibrium profits from liquidate the complete position.

2. Consider a trader with initial fund given by To = 15, and the transaction cost function of holding q shares of stock i is C(q) = 10 + q². The price (x₂) at which this trader sells its position is stochastically distributed according to the following probability distribution: (0.5, 0.5, if x₂ = $2 if x₁ = $8 Let a random variable ♬ be the profit of trading at each time t, t = 1, 2, …, T, (a) If the trader's utility function is given by 1 u(ñ) = µ(ñ) — -—-0(ñ), P(x₁) = where μ() is the mean and o() is the variance, determine the trader's optimal level of position, and the associated equilibrium profits from liquidate the complete position.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.3P

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