Basic College Mathematics
13th Edition
ISBN: 9780134689623
Author: BITTINGER, Marvin L., BEECHER, Judith A., Johnson, Barbara L. (barbara Loreen)
Publisher: Pearson Higher Education,
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Chapter 7, Problem 24RE
To determine
To Skech: A vertical bar graph of the given data.
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Calculus lll
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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
C
55, 60, 63, 64, 65, 71, 83, 87, 88, 88, 89, 93\ 55,\ 60,\ 63,\ 64,\ 65,\ 71,\ 83,\ 87,\ 88,\ 88,\ 89,\ 93 55, 60, 63, 64, 65, 71, 83, 87, 88, 88, 89, 93
D
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.)
Chapter 7 Solutions
Basic College Mathematics
Ch. 7.1 - Multiply using mixed numerals. Multiply. 1. 312800Ch. 7.1 - Prob. 2SRCh. 7.1 - Prob. 1DECh. 7.1 - Prob. 2DECh. 7.1 - Prob. 3DECh. 7.1 - Prob. 4DECh. 7.1 - Prob. 5DECh. 7.1 - Prob. 6DECh. 7.1 - Prob. 7DECh. 7.1 - Prob. 8DE
Ch. 7.1 - Prob. 9DECh. 7.1 - Prob. 10DECh. 7.1 - Prob. 11DECh. 7.1 - Prob. 12DECh. 7.1 - Prob. 13DECh. 7.1 - Prob. 14DECh. 7.1 - Prob. 15DECh. 7.1 - Prob. 1RCCh. 7.1 - Prob. 2RCCh. 7.1 - Prob. 3RCCh. 7.1 - Prob. 4RCCh. 7.1 - Prob. 1CCCh. 7.1 - Prob. 2CCCh. 7.1 - Prob. 3CCCh. 7.1 - Prob. 4CCCh. 7.1 - Prob. 5CCCh. 7.1 - Prob. 1ECh. 7.1 - Prob. 2ECh. 7.1 - Prob. 3ECh. 7.1 - Prob. 4ECh. 7.1 - Prob. 5ECh. 7.1 - Prob. 6ECh. 7.1 - Prob. 7ECh. 7.1 - Prob. 8ECh. 7.1 - Prob. 9ECh. 7.1 - Prob. 10ECh. 7.1 - Prob. 11ECh. 7.1 - Prob. 12ECh. 7.1 - Prob. 13ECh. 7.1 - Prob. 14ECh. 7.1 - Prob. 15ECh. 7.1 - Prob. 16ECh. 7.1 - Prob. 17ECh. 7.1 - Planets. Use the following table, which lists...Ch. 7.1 - Prob. 19ECh. 7.1 - Prob. 20ECh. 7.1 - Prob. 21ECh. 7.1 - Prob. 22ECh. 7.1 - Prob. 23ECh. 7.1 - Prob. 24ECh. 7.1 - Prob. 25ECh. 7.1 - Prob. 26ECh. 7.1 - Prob. 27ECh. 7.1 - Prob. 28ECh. 7.1 - Prob. 29ECh. 7.1 - Prob. 30ECh. 7.1 - Personal Consumption Expenditures. The following...Ch. 7.1 - Prob. 32ECh. 7.1 - Prob. 33ECh. 7.1 - Prob. 34ECh. 7.1 - Prob. 35ECh. 7.1 - Prob. 36ECh. 7.1 - Prob. 37ECh. 7.1 - Prob. 38ECh. 7.1 - Prob. 39ECh. 7.1 - Prob. 40ECh. 7.1 - Prob. 41ECh. 7.1 - Prob. 42ECh. 7.1 - Prob. 43ECh. 7.1 - Prob. 44ECh. 7.2 - Prob. 1SRCh. 7.2 - Prob. 2SRCh. 7.2 - Prob. 1DECh. 7.2 - Prob. 2DECh. 7.2 - Prob. 3DECh. 7.2 - Prob. 4DECh. 7.2 - Prob. 5DECh. 7.2 - Prob. 6DECh. 7.2 - Prob. 7DECh. 7.2 - Prob. 8DECh. 7.2 - Prob. 1RCCh. 7.2 - Prob. 2RCCh. 7.2 - Prob. 3RCCh. 7.2 - Prob. 4RCCh. 7.2 - Prob. 1CCCh. 7.2 - Prob. 2CCCh. 7.2 - Prob. 3CCCh. 7.2 - Prob. 4CCCh. 7.2 - Prob. 1ECh. 7.2 - Prob. 2ECh. 7.2 - Prob. 3ECh. 7.2 - Prob. 4ECh. 7.2 - Prob. 5ECh. 7.2 - Prob. 6ECh. 7.2 - Prob. 7ECh. 7.2 - Prob. 8ECh. 7.2 - Prob. 9ECh. 7.2 - Prob. 10ECh. 7.2 - Prob. 11ECh. 7.2 - Prob. 12ECh. 7.2 - Prob. 13ECh. 7.2 - Prob. 14ECh. 7.2 - Prob. 15ECh. 7.2 - Prob. 16ECh. 7.2 - Prob. 17ECh. 7.2 - Prob. 18ECh. 7.2 - Prob. 19ECh. 7.2 - Prob. 20ECh. 7.2 - Prob. 21ECh. 7.2 - Prob. 22ECh. 7.2 - Prob. 23ECh. 7.2 - CITY COST OF LIVING INDEX Chicago 116.9 Denver W.4...Ch. 7.2 - Prob. 25ECh. 7.2 - Prob. 26ECh. 7.2 - Prob. 27ECh. 7.2 - Prob. 28ECh. 7.2 - Prob. 29ECh. 7.2 - Prob. 30ECh. 7.2 - Prob. 31ECh. 7.2 - Prob. 32ECh. 7.2 - Prob. 33ECh. 7.2 - Prob. 34ECh. 7.2 - Prob. 35ECh. 7.2 - Prob. 36ECh. 7.2 - Prob. 37ECh. 7.2 - Prob. 38ECh. 7.2 - Prob. 39ECh. 7.2 - Prob. 40ECh. 7.2 - Prob. 41ECh. 7.2 - Prob. 42ECh. 7.2 - Prob. 43ECh. 7.2 - Prob. 44ECh. 7.2 - Prob. 45ECh. 7.2 - Prob. 46ECh. 7.2 - Prob. 47ECh. 7.2 - Prob. 48ECh. 7.2 - Prob. 49ECh. 7.2 - Prob. 50ECh. 7.2 - Prob. 51ECh. 7.2 - Prob. 52ECh. 7.2 - Prob. 53ECh. 7.2 - Prob. 54ECh. 7.2 - Prob. 55ECh. 7.2 - Prob. 56ECh. 7.2 - Prob. 57ECh. 7.2 - Prob. 58ECh. 7.2 - Prob. 59ECh. 7.2 - Prob. 60ECh. 7.3 - Prob. 1SRCh. 7.3 - Prob. 2SRCh. 7.3 - Prob. 1DECh. 7.3 - Prob. 2DECh. 7.3 - Prob. 3DECh. 7.3 - Prob. 4DECh. 7.3 - Prob. 5DECh. 7.3 - Prob. 6DECh. 7.3 - Prob. 7DECh. 7.3 - Prob. 8DECh. 7.3 - Prob. 9DECh. 7.3 - Prob. 10DECh. 7.3 - Prob. 11DECh. 7.3 - Prob. 12DECh. 7.3 - Prob. 13DECh. 7.3 - Prob. 14DECh. 7.3 - Prob. 15DECh. 7.3 - Prob. 16DECh. 7.3 - Prob. 17DECh. 7.3 - Prob. 18DECh. 7.3 - Prob. 19DECh. 7.3 - Prob. 20DECh. 7.3 - Prob. 1RCCh. 7.3 - Prob. 2RCCh. 7.3 - Prob. 3RCCh. 7.3 - Prob. 4RCCh. 7.3 - Prob. 1CCCh. 7.3 - Prob. 2CCCh. 7.3 - Prob. 3CCCh. 7.3 - Prob. 4CCCh. 7.3 - Prob. 5CCCh. 7.3 - Prob. 6CCCh. 7.3 - Prob. 1ECh. 7.3 - Prob. 2ECh. 7.3 - Prob. 3ECh. 7.3 - Prob. 4ECh. 7.3 - Prob. 5ECh. 7.3 - Prob. 6ECh. 7.3 - Prob. 7ECh. 7.3 - Prob. 8ECh. 7.3 - Prob. 9ECh. 7.3 - Prob. 10ECh. 7.3 - Prob. 11ECh. 7.3 - Prob. 12ECh. 7.3 - Prob. 13ECh. 7.3 - Prob. 14ECh. 7.3 - Prob. 15ECh. 7.3 - Prob. 16ECh. 7.3 - Prob. 17ECh. 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 - Length of Pregnancy. Marta was pregnant 270 days....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. 7.3 - Prob. 33ECh. 7.3 - Prob. 34ECh. 7.3 - Prob. 35ECh. 7.3 - Prob. 36ECh. 7.3 - Prob. 37ECh. 7.3 - Prob. 38ECh. 7.3 - Prob. 39ECh. 7.3 - Prob. 40ECh. 7.3 - Prob. 41ECh. 7.3 - Prob. 42ECh. 7.3 - Prob. 43ECh. 7.3 - Prob. 44ECh. 7.3 - Prob. 45ECh. 7.4 - Prob. 1SRCh. 7.4 - Translate to an equation and solve, Round to the...Ch. 7.4 - Prob. 1DECh. 7.4 - Prob. 2DECh. 7.4 - Prob. 3DECh. 7.4 - Prob. 4DECh. 7.4 - Prob. 5DECh. 7.4 - Prob. 6DECh. 7.4 - Survey Resuhs. A survey of community college...Ch. 7.4 - Prob. 8DECh. 7.4 - Prob. 9DECh. 7.4 - Prob. 10DECh. 7.4 - Prob. 11DECh. 7.4 - Prob. 12DECh. 7.4 - Prob. 13DECh. 7.4 - Prob. 14DECh. 7.4 - Prob. 1RCCh. 7.4 - Prob. 2RCCh. 7.4 - Prob. 3RCCh. 7.4 - Prob. 4RCCh. 7.4 - Prob. 5RCCh. 7.4 - Prob. 1CCCh. 7.4 - Prob. 2CCCh. 7.4 - Prob. 1ECh. 7.4 - Prob. 2ECh. 7.4 - Prob. 3ECh. 7.4 - Prob. 4ECh. 7.4 - Prob. 5ECh. 7.4 - Prob. 6ECh. 7.4 - Prob. 7ECh. 7.4 - Prob. 8ECh. 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 - Prob. 15ECh. 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 - Prob. 22ECh. 7.4 - Prob. 23ECh. 7.4 - Prob. 24ECh. 7.4 - Prob. 25ECh. 7.4 - Prob. 26ECh. 7.4 - Prob. 27ECh. 7.4 - Prob. 28ECh. 7.4 - Prob. 29ECh. 7.4 - Prob. 30ECh. 7.4 - Prob. 31ECh. 7.4 - Prob. 32ECh. 7.4 - Prob. 33ECh. 7.4 - Prob. 34ECh. 7.4 - Prob. 35ECh. 7.4 - Prob. 36ECh. 7.4 - Prob. 37ECh. 7.4 - Prob. 38ECh. 7.4 - Prob. 39ECh. 7.4 - Prob. 40ECh. 7.4 - Prob. 41ECh. 7.4 - Prob. 42ECh. 7.4 - Prob. 43ECh. 7.4 - Prob. 44ECh. 7.4 - Prob. 45ECh. 7.4 - Prob. 46ECh. 7.4 - Prob. 47ECh. 7.4 - Prob. 48ECh. 7.4 - Prob. 49ECh. 7.4 - Prob. 50ECh. 7.4 - Prob. 51ECh. 7.4 - Prob. 52ECh. 7.4 - Prob. 53ECh. 7.5 - Simplify fractions. [2.5b] Simplify. 1. 510Ch. 7.5 - Prob. 2SRCh. 7.5 - Prob. 1DECh. 7.5 - Prob. 2DECh. 7.5 - Using the bag of marbles described in Example 3....Ch. 7.5 - Prob. 4DECh. 7.5 - Prob. 5DECh. 7.5 - A card is randomly selected from a well-shuffled...Ch. 7.5 - Prob. 1RCCh. 7.5 - Prob. 2RCCh. 7.5 - Prob. 3RCCh. 7.5 - Prob. 4RCCh. 7.5 - Prob. 1CCCh. 7.5 - Prob. 2CCCh. 7.5 - Prob. 1ECh. 7.5 - Prob. 2ECh. 7.5 - Prob. 3ECh. 7.5 - Prob. 4ECh. 7.5 - Prob. 5ECh. 7.5 - Prob. 6ECh. 7.5 - Prob. 7ECh. 7.5 - Prob. 8ECh. 7.5 - Prob. 9ECh. 7.5 - Prob. 10ECh. 7.5 - Prob. 11ECh. 7.5 - Prob. 12ECh. 7.5 - Prob. 13ECh. 7.5 - Prob. 14ECh. 7.5 - Prob. 15ECh. 7.5 - Prob. 16ECh. 7.5 - Prob. 17ECh. 7.5 - Prob. 18ECh. 7.5 - Prob. 19ECh. 7.5 - Prob. 20ECh. 7.5 - Prob. 21ECh. 7.5 - Prob. 22ECh. 7.5 - Prob. 23ECh. 7.5 - Prob. 24ECh. 7.5 - Prob. 25ECh. 7.5 - Prob. 26ECh. 7.5 - Prob. 27ECh. 7.5 - Prob. 28ECh. 7.5 - Prob. 29ECh. 7 - Determine whether each statement is true or false....Ch. 7 - Prob. 2MCCh. 7 - Prob. 3MCCh. 7 - Prob. 4MCCh. 7 - Prob. 5MCCh. 7 - Prob. 6MCCh. 7 - Prob. 7MCCh. 7 - Prob. 8MCCh. 7 - Prob. 9MCCh. 7 - Prob. 10MCCh. 7 - Prob. 11MCCh. 7 - Prob. 12MCCh. 7 - Prob. 13MCCh. 7 - Prob. 14MCCh. 7 - Prob. 15MCCh. 7 - Prob. 16MCCh. 7 - Prob. 17MCCh. 7 - Prob. 18MCCh. 7 - Prob. 19MCCh. 7 - Prob. 20MCCh. 7 - Prob. 21MCCh. 7 - Prob. 1VRCh. 7 - Prob. 2VRCh. 7 - Prob. 3VRCh. 7 - Prob. 4VRCh. 7 - Prob. 5VRCh. 7 - Prob. 6VRCh. 7 - Prob. 1CRCh. 7 - Prob. 2CRCh. 7 - Prob. 3CRCh. 7 - Prob. 1PECh. 7 - Prob. 2PECh. 7 - Prob. 3PECh. 7 - Prob. 4PECh. 7 - Prob. 5PECh. 7 - Prob. 6PECh. 7 - Prob. 7PECh. 7 - Prob. 1RECh. 7 - Prob. 2RECh. 7 - Prob. 3RECh. 7 - Prob. 4RECh. 7 - Prob. 5RECh. 7 - Prob. 6RECh. 7 - Prob. 7RECh. 7 - Prob. 8RECh. 7 - Prob. 9RECh. 7 - Prob. 10RECh. 7 - Prob. 11RECh. 7 - Prob. 12RECh. 7 - Prob. 13RECh. 7 - Prob. 14RECh. 7 - Prob. 15RECh. 7 - Prob. 16RECh. 7 - Prob. 17RECh. 7 - Prob. 18RECh. 7 - Prob. 19RECh. 7 - Prob. 20RECh. 7 - Prob. 21RECh. 7 - Prob. 22RECh. 7 - Prob. 23RECh. 7 - Prob. 24RECh. 7 - Prob. 25RECh. 7 - Prob. 26RECh. 7 - Prob. 27RECh. 7 - Prob. 28RECh. 7 - Prob. 29RECh. 7 - Prob. 30RECh. 7 - Prob. 31RECh. 7 - Prob. 32RECh. 7 - Prob. 33RECh. 7 - Prob. 34RECh. 7 - Prob. 35RECh. 7 - Prob. 36RECh. 7 - Prob. 37RECh. 7 - Prob. 38RECh. 7 - Prob. 39RECh. 7 - Prob. 40RECh. 7 - Prob. 41RECh. 7 - Prob. 1TCh. 7 - Prob. 2TCh. 7 - Prob. 3TCh. 7 - Prob. 4TCh. 7 - Prob. 5TCh. 7 - Prob. 6TCh. 7 - Prob. 7TCh. 7 - Prob. 8TCh. 7 - Prob. 9TCh. 7 - Prob. 10TCh. 7 - Prob. 11TCh. 7 - Prob. 12TCh. 7 - Prob. 13TCh. 7 - Prob. 14TCh. 7 - Prob. 15TCh. 7 - Prob. 16TCh. 7 - Prob. 17TCh. 7 - Prob. 18TCh. 7 - Prob. 19TCh. 7 - Prob. 20TCh. 7 - Prob. 21TCh. 7 - Prob. 22TCh. 7 - Prob. 23TCh. 7 - Prob. 24TCh. 7 - Prob. 25TCh. 7 - Prob. 26TCh. 7 - Prob. 27TCh. 7 - Prob. 28TCh. 7 - Prob. 29TCh. 7 - Prob. 30TCh. 7 - Prob. 31TCh. 7 - Prob. 32TCh. 7 - Prob. 33TCh. 7 - Prob. 34TCh. 7 - Prob. 1CURCh. 7 - Prob. 2CURCh. 7 - Prob. 3CURCh. 7 - Prob. 4CURCh. 7 - Prob. 5CURCh. 7 - Prob. 6CURCh. 7 - Prob. 7CURCh. 7 - Prob. 8CURCh. 7 - Prob. 9CURCh. 7 - Prob. 10CURCh. 7 - Prob. 11CURCh. 7 - Prob. 12CURCh. 7 - Prob. 13CURCh. 7 - Prob. 14CURCh. 7 - Prob. 15CURCh. 7 - Prob. 16CURCh. 7 - Prob. 17CURCh. 7 - Prob. 18CURCh. 7 - Prob. 19CURCh. 7 - Prob. 20CURCh. 7 - Prob. 21CURCh. 7 - Prob. 22CURCh. 7 - Prob. 23CURCh. 7 - Prob. 24CURCh. 7 - Prob. 25CURCh. 7 - Prob. 26CURCh. 7 - Peanut Products. In any given year, the average...Ch. 7 - Prob. 28CURCh. 7 - Prob. 29CURCh. 7 - Prob. 30CURCh. 7 - Prob. 31CURCh. 7 - Prob. 32CURCh. 7 - Prob. 33CURCh. 7 - Prob. 34CURCh. 7 - Prob. 35CURCh. 7 - Prob. 36CURCh. 7 - Prob. 37CURCh. 7 - Prob. 38CUR
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- 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?arrow_forwardThe Course Name Real Analysis please Solve questions by Real Analysisarrow_forwardWe consider a 4-dimensional stock price model given (under P) by dẴ₁ = µ· Xt dt + йt · ΣdŴt where (W) is an n-dimensional Brownian motion, π = (0.02, 0.01, -0.02, 0.05), 0.2 0 0 0 0.3 0.4 0 0 Σ= -0.1 -4a За 0 0.2 0.4 -0.1 0.2) and a E R. We assume that ☑0 = (1, 1, 1, 1) and that the interest rate on the market is r = 0.02. (a) Give a condition on a that would make stock #3 be the one with largest volatility. (b) Find the diversification coefficient for this portfolio as a function of a. (c) Determine the maximum diversification coefficient d that you could reach by varying the value of a? 2arrow_forward
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