# Tagged Questions

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### Break Even Point

Suppose that x thousand units of a product will be sold when the price is p(x) = 50 - 1.25x dollars per unit and the cost of producing x thousand units is C(x) = 20x + 100 thousand dollars. a) What ...
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### Finding criteria for a household financial budget falsification

I’m working on a financial problem about budget of households. Households in a state fill a form about their net budget in every year and our insurance company investigate their financial status and ...
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### Why is that a risk averse consumer buys the optimum insurance when there is actuarially fair insurance?

I've asked the same question at the Quantitative Finance StackExchange. Consider the following example: "As a risk-averse consumer, you would want to choose a value of x so as to maximize expected ...
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### Put-Call-Parity of Asian Options

I could need some help with deriving the put-call-parity for asian options. Let $S_t$ be the price of the underlying asset at time $t$ and set $Y_t = \int_0^t S_t dt$. Then the payoff of an asian ...
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### Arbitrage opportunity for call price set on avarage

I have the following problem. Let C(K) be the market price of a Option Call with respect to the strike K. Let $C(100) = \frac{C(110)+C(90)}{2}$, then show that there exists an arbitrage opportunity. ...
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### Understanding basic stochastic differential equations

This is from a physics course in economics, the literature provides a bare minimum of mathematical explanations. I am trying to understand how to work with stochastic differential equations given in ...
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### Short and long positions of call options

I am on part c), and I want to know: Since I am the seller of this call option, I sold it for 0.44, and the option is worth 1 dollar at expiration. Assuming the buyer wants to make profit he will ...
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### Net Present Value Calculation for Construction Project with Initial Capital

I'm having real trouble working out how to do the following question because of the initial capital that the company has at the start of the project, meaning that they can delay taking out a loan ...
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### Net Present Worth Calculation (Economic Equivalence)

I'm currently doing some work involving net present worth analyses, and I'm really struggling with calculations that involve interest and inflation, such as the question below. I feel that if anyone ...
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### Portfolio Optimization Problem Without Correlation Info

I received this interesting problem from a friend today: Assume that you are a portfolio manager with \$10 million to allocate to hedge funds. The due diligence team has identified the following ...
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### Statistics with overlapping periods

I've been having a lot of discussions about finance recently in which people will point to some results using overlapping time periods and claim a high degree of statistical significance. For ...
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### A (mathematically) sound investment strategy

It is common wisdom in the investment community that a long-term investor saving for his future would do well to invest in high-risk/high-return assets when he is young, slowly switching his portfolio ...
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### Optimizing Group Spending

I have always thought that groups of individuals that spend more money(as opposed to save) have more money in the long run. My reasoning is that if a particular group spends money, then each dollar ...