MSc in Finance and Investment

Presessional Maths and Stats.

Maths Lecture Exercises
2. Determine the equations of the following straight lines
(a) L2 passes through (2,2) and (3,3)
Slope = (3 2)/(3 2) = 1/5 3 = a + 3/5 , a = 12/5. y = 12/5 + x/5
2 = 12/5 2/5 = 2
(b) L2 passes through (a,0) and (0,b)
slope = b/a and intercept = b, so y = b bx/a

6. Let f(x) = 3 27 x 3
(a) Compute f(0), f(1), f(1/3) and f( 3 2 )
f(0) = 3, f(1) = 30, f(1/3) = 2, f( 3 2 ) = 3 27 2
(b) Show that f(x) + f(x) = 6
f(x) = 3 27 x 3 f(x) = 3 + 27 x 3 thus f(x) + f(x) = 3 27 x 3 + 3 + 27 x 3 = 6

8. Find the equation of the parabola y = a x 2 + bx + c which passes through (1, 3)

(0, 6) and (3,15)
a + b+c = 3
c = 6
9a + 3b + c = 15
Thus

a + b = 3

9a + 3b = 21

or 3a + b = 7 since b = 3 a

3a + 3 a = 7 so a = 2 and b = 1
Thus y = 2 x 2 + x 6

10 As winner of a competition, you can choose one of the following prizes

(a) 100,000 now
(b) 180,000 in 5 years
(c) 11,400 a year for ever
(d) 19,000 for each of 10 years
If the interest rate is 12% per year, which is the most valuable prize?
Present Value of (b) =

180000
180000
=
= 102,139.25
5
1.7623
1.12

Present Value of (c) = 11,400/0.12 = 95,000

Present Value of (d) = A =

a
1
19000
1
1
=
1
=

n
r ( 1 r )
0.12 1.1210

158333.33(1 0.3220) = 107,350

So (d) > (b) > (a) > (c)

choose (d)

16. Solve the following equations for x

(a) 5e 3 x = 16.
Taking logs we have
ln 5 3xloge = ln16 so x = (ln16 ln5)/3 =
Taking logs
ln5 + ln A + ln x = ln k
x

(ln5 + ln A + ln ln k)/ =
(b) 5Ae x = k
Taking logs
log 5A x = log(k)
x=

log5A logk
=

1 5A
ln

1 5
ln = 0.3877
3 16

(c) ( 1.08 )x = 10
Taking logs
xln(1.08) = ln 10 thus

x =

ln 10
2.3026
=
= 29.904
ln 1.08
0.077

(d) e x + 4 e x = 4
Here we need to make a substitution
Let e x = v then
v + 4/v = 4

v 2 4v

4 = 0

(v 2)(v 2) = 0

v = e x = 2 So x = ln 2

20. Differentiate the following functions with respect to x

(a)

x 1
x5

f(x) =

x 5 5x 4 (1 x )
(4x 5)
=
10
x
x6

(b)

x 1
x 1

f(x) =

x 1 ( x 1)
2
=
2
( x 1)
( x 1) 2

(c)

f(x) =

x2 x 1
x2 x 1
(2x 1)(x 2 x 1) (2x 1)(x 2 x 1)
2(1 x 2 )
=
( x 2 x 1) 2
( x 2 x 1) 2

24 Compute the second derivative of

(a)

y=

dy
1
=
=
dx
2 x
(b)

x 1/ 2
2

1
4( x ) 3

y =

d2y
= = 20 (1 x 2 ) 9 + 360x (1 x 2 ) 8
2
dx

x2
x 1

2x ( x 1) x 2 x ( x 2)
dy
=
=
dx
( x 1) 2
( x 1) 2

d2y
2( x 1)3 2x( x 2 )(
=
dx 2
( x 1)2

x 1)

2( x 1)2 2x( x 2 )
( x 1)

=
28.

y = ( 1 x 2 )10

dy
= 20x (1 x 2 ) 9
dx
(c)

d2y
x
=
2
4
dx

3 / 2

so

Compute the first and second derivatives of

(a) y = ln x + 3x 2
y
= (1/x) + 3
x

2y
x 2

1
x2

x 3 ln x

(b) y =

y
2y
= 3x 2 ln x + x 2
= 6x ln x + 5x
x
x 2

(c) y =

ln x
x

1 ln x
y
=
x
x2

2y
x 2

x 2x(1 ln x )
1 2(1 ln x ) 2 ln x 3
=
=
4
x
x3
x3

(d) y = e x ln x

e
y
=
+ e x ln x
x
x
x

2y
x 2

e x x 1
ex
e x x 2l ln x 2x 1
x
e
ln
x
+
+
=
x
x2
x2

30

Find the extreme points of the following functions and determine if they are maxima
or minima.
(a)

e 3x 6 e x

dy
= 3 e 3 x 6 e x = 0 so e 2 x = 2 and x = (ln2)/2
dx

d2y
= 9 e 3 x 6 e x > 0 for x > 0 so this is a minimum
2
dx
(b)

x 3 ln x

dy
= x 2 (3 ln x 1) = 0 so ln x = (1/3)
dx

d2y
= 2x(3ln x 1) + 3x
dx 2

34.

so x = 0.7166

> 0 if x =0.7166. Thus this is a minimum

Maximize f(x) = 24 x x 2 + 16y 2y 2 subject to x 2 + 2y 2 = 44

L = 24 x x 2 + 16y 2y 2 ( x 2 + 2y 2 44)

dL
= 24 2x 2x
dx

dL
= 16 4 y 4y =
dy

= 12 x x

4 y y =

= 0

dL
= x 2 + 2y 2 44 = 0
d
4 y y =

0 implies

Substituting this into

dL
gives
dx

( 4 y)
y
12 x

x ( 4 y)
= 0
y

12y xy 4x + xy = 0 thus 3y = x
Substituting this into the constraint gives 11y 2 = 44 so y =2 and x = 6

36.

Find the following indefinite integrals

x10
+ C
10

(a)

9
x dx =

(b)

x xdx =

(c)

(d)

2
( x 1) dx =

2( x ) 5
+C
5

dx = e x + C
x3
2x 2

+ x + C
3
2

40. Verify that A(B + C) = AB + AC where

A = 1

B =

B+C = 1

AB = 8

C = 1

0 1

A(B + C)

18 7

11

AC =

14

11 11

45. Let X = 1 1 1 1
0 1 2 0
0 1 0 1
Calculate XX and XX

1 1 1 1

0 1 2

0 1 0 1

1
1

XX

XX = 4x9 3x(6-2) + 2x(3-10) = 10