Mathematics for Business and Economics - Exam Points

Exam date: January 27, 2020

1
Non-graphic calculator and one A4 sheet with formulas and other Enrolment Year
content are allowed. Time: 90 minutes. Good luck! • full-time 2
• part-time
Name and surname Registration number
3
4


Problem 1 (15 points)

a) (12) Find the determinant
 
 2
 1 −1  
 1 0 1 1 
A= 
−1 1 −1 −3
.

  1 −3 2 

b) (3) Find the value of the variable  that maximizes the determinant A?

Solution

a) Combining row/column operations and expansion, you get

     
 2 1 −1   −1 1 −1 −3 −1 1 −1 −3
     
 1 0 1 1   1 0 1 1   1 0 1 1 
A =  =− = =
−1 1 −1 −3  2 1 −1   −1 1 2  
    
  1 −3 2    1 −3 2  −3 1  2 
 
−1 1 −1 −3   
  1 0 −2 
 0 1 0 −2 
 0 2 + 1  + 3  =
 
1+1 
=   = (−1)(−1)
+ +

0 0 2 1  3 −2  + 3 2 + 9
 0 −2  + 3 2 + 9
 

 
1 0 −2
1+1 2 + 1  + 3 
  
= − 0 2 + 1  + 3  = −1(−1)
  
  + 3 2 + 5 =
 
0  + 3 2 + 5

= − (2 + 1)(2 + 5) − ( + 3)2 = −32 − 6 + 4.

b) Stationary point: A0 () = −6 − 6 = 0 ⇒  = −1.

A00 () = −6 ⇒ A00 (−1) < 0 ⇒  = −1 really is a maximum.
Problem 2 (20 points)
Consider the function
10 ln2 
ƒ () = .

Find its domain, zeros, poles, the first and the second derivative, extrema, intervals
where it is increasing or decreasing, and its range. What happens to the function
value as  → ∞ and as  → 0? Sketch the graph of the function ƒ () in the given
coordinate system.

Solution

Dƒ = (0, ∞). 2 ln  − ln2 

ƒ 0 () = 10 · .
Zero:  = 1. 2
ln2  − 3 ln  + 1
Pole:  = 0. ƒ 00 () = 20 · .
3
Extrema:
ƒ 0 () = 0 ⇒ ln  = 0 or ln  = 2 ⇒ 1 = 1 or 2 = e2 ≈ 7.39.
ƒ (1) = 0 and ƒ 00 (1) = 20 > 0 ⇒ local minimum T1 (1, 0).
40
ƒ (e2 ) = e2
≈ 5.41 and ƒ 00 (e2 ) = − 20
e6
< 0 ⇒ local maximum T2 (e2 , 40
e2
).

Increasing on (1, e2 ), decreasing on (0, 1) ∪ (e2 , ∞).

Rƒ = [0, ∞). lim→0 ƒ () = ∞. lim→∞ ƒ () = 0.

10

5 10 15

-2
Problem 3 (20 points)
You borrow e5,000 from a bank and agree to repay the debt with a (delayed) four-
year sequence of monthly installments; the first installment is due one year and
one month after taking the loan and the last is due five years after taking the loan.
The bank uses an interest rate of 4% per year and conform monthly compounding.
a) (12) Find the installment amount.
b) (8) You agree with the bank that the installment amounts are e100 each. Find
the amount you need to add to the last installment to repay the debt.

Solution

a) Balance B = 5,000 e.
p
12
p
12
Monthly interest factor k = 1+R= 1.04.
Installment amount .
Cash flow diagram:

 
···

1 2 3 4 5 years

The equivalence of cash flows:

Bk 60 = k 47 + k 46 + · · · + k + 
Bk 60 = (k 47 + k 46 + · · · + k + 1)
k 48 − 1
Bk 60 =  ·
k−1
k−1
 = Bk 60 ·
k 48 − 1
 = 117.24 e

The installment amount is e117.24.

b) Let  = 100 e be the installment and y the amount added to the last installment.
The equivalence of cash flows:

Bk 60 = k 47 + k 46 + · · · + k +  + y
Bk 60 = (k 47 + k 46 + · · · + k + 1) + y
k 48 − 1
Bk 60 =  · +y
k−1
k 48 − 1
y = Bk 60 −  ·
k−1
y = 894.75 e

You need to add e894.75.

Problem 4 (15 points)
You have 1 white and 1 red ball in the first jar, 1 red and 2 blue balls in the second
jar, and 1 white and 3 blue balls in the third jar. You blindly draw one ball from each
jar. The random variable X is the total number of red balls drawn.
a) (7) Find the probability function of the random variable X.
b) (3) Find the probability that two red balls are drawn if you know that at least
one red ball is drawn.
c) (5) Find the expected value and the standard deviation of X.

Solution

a) Let R – a red ball is drawn from the th jar.

Possibilities X Probabilities
1 2 2
R1 R2 R3 0 2
· 3
·1= 6
1 2 2
R1 R2 R3 1 2
· 3
·1= 6
1 1 1
R1 R2 R3 1 2
· 3
·1= 6
1 1 1
R1 R2 R3 2 2
· 3
·1= 6

Probability function:  
0 1 2
X: 2 3 1
6 6 6
b)
1
P(X = 2 and X ≥ 1) P(X = 2) 6 1
P(X = 2|X ≥ 1) = = = = 4
P(X ≥ 1) P(X = 1) + P(X = 2) 3
+ 1
6 6

c)
2 3 1 5
E(X) = 0 · 6
+1· 6
+2· 6
= 6
€ Š2
V(X) = E(X 2 ) − E(X)2 = 02 · 62 + 12 · 3
6
+ 22 · 1
6
− 5
6
= 17
36
Ç p
σ(X) = V(X) = 17 = 17
p
36 6
Mathematics for Business and Economics - Exam Points
Exam date: January 27, 2020
1
Non-graphic calculator and one A4 sheet with formulas and other Enrolment Year
content are allowed. Time: 90 minutes. Good luck! • full-time 2
• part-time
Name and surname Registration number
3
4


Problem 1 (15 points)

a) (12) Find the determinant
 
 3
 1 −1  
 1 0 1 1 
B= 
−1 1 1 −2
.

  1 −2 3 

b) (3) Find the value of the variable  that maximizes the determinant B?

Solution

a) Combining row/column operations and expansion, you get

     
 3 1 −1   −1 1 1 −2  1 1 −1 −2
     
 1 0 1 1   1 0 1 1   1 0 1 1 
B =  =− = =
−1 1 1 −2  3 1 −1   −1 1 3  
    
  1 −2 3    1 −2 3  −2 1  3 
 
1 1 −1 −2  
−1


0 −1 2 3 
2 3   
1+1 
=   = 1(−1)  2 3 − 1  − 2  =

0 2 3 − 1  − 2
   3  − 2 3 − 4
0 3  − 2 3 − 4
 
−1 2 3
1+1 3 + 3  + 4 
  
=  0 3 + 3  + 4  = (−1)(−1)
  
  + 4 3 + 5 =
 
 0  + 4 3 + 5

= − (3 + 3)(3 + 5) − ( + 4)2 = −82 − 16 + 1.

b) Stationary point: B0 () = −16 − 16 = 0 ⇒  = −1.

B00 () = −16 ⇒ B00 (−1) < 0 ⇒  = −1 really is a maximum.
Problem 2 (20 points)
Consider the function
15 ln2 
ƒ () = .

Find its domain, zeros, poles, the first and the second derivative, extrema, intervals
where it is increasing or decreasing, and its range. What happens to the function
value as  → ∞ and as  → 0? Sketch the graph of the function ƒ () in the given
coordinate system.

Solution

Dƒ = (0, ∞). 2 ln  − ln2 

ƒ 0 () = 15 · .
Zero:  = 1. 2
ln2  − 3 ln  + 1
Pole:  = 0. ƒ 00 () = 30 · .
3
Extrema:
ƒ 0 () = 0 ⇒ ln  = 0 or ln  = 2 ⇒ 1 = 1 or 2 = e2 ≈ 7.39.
ƒ (1) = 0 and ƒ 00 (1) = 30 > 0 ⇒ local minimum T1 (1, 0).
60
ƒ (e2 ) = e2
≈ 8.12 and ƒ 00 (e2 ) = − 30
e6
< 0 ⇒ local maximum T2 (e2 , 60
e2
).

Increasing on (1, e2 ), decreasing on (0, 1) ∪ (e2 , ∞).

Rƒ = [0, ∞). lim→0 ƒ () = ∞. lim→∞ ƒ () = 0.

10

5 10 15

-2
Problem 3 (20 points)
You borrow e6,000 from a bank and agree to repay the debt with a (delayed) five-
year sequence of monthly installments; the first installment is due one year and
one month after taking the loan and the last is due six years after taking the loan.
The bank uses an interest rate of 3% per year and conform monthly compounding.
a) (12) Find the installment amount.
b) (8) You agree with the bank that the installment amounts are e100 each. Find
the amount you need to add to the last installment to repay the debt.

Solution

a) Balance B = 6,000 e.
p
12
p
12
Monthly interest factor k = 1+R= 1.03.
Installment amount .
Cash flow diagram:

 
···

1 2 3 4 5 6 years

The equivalence of cash flows:

Bk 72 = k 59 + k 58 + · · · + k + 
Bk 72 = (k 59 + k 58 + · · · + k + 1)
k 60 − 1
Bk 72 =  ·
k−1
k−1
 = Bk 72 ·
k 60 − 1
 = 110.94 e

The installment amount is e110.94.

b) Let  = 100 e be the installment and y the amount added to the last installment.
The equivalence of cash flows:

Bk 72 = k 59 + k 58 + · · · + k +  + y
Bk 72 = (k 59 + k 58 + · · · + k + 1) + y
k 60 − 1
Bk 72 =  · +y
k−1
k 60 − 1
y = Bk 72 −  ·
k−1
y = 706.22 e

You need to add e706.22.

Problem 4 (15 points)
You have 1 white and 1 red ball in the first jar, 1 red and 2 blue balls in the second
jar, and 1 white and 3 blue balls in the third jar. You blindly draw one ball from each
jar. The random variable X is the total number of white balls drawn.
a) (7) Find the probability function of the random variable X.
b) (3) Find the probability that two white balls are drawn if you know that at least
one white ball is drawn.
c) (5) Find the expected value and the standard deviation of X.

Solution

a) Let W – a white ball is drawn from the th jar.

Possibilities X Probabilities
1 3 3
W1W2W3 0 2
·1· 4
= 8
1 3 3
W1 W 2 W 3 1 2
·1· 4
= 8
1 1 1
W 1 W 2 W3 1 2
·1· 4
= 8
1 1 1
W1 W 2 W3 2 2
·1· 4
= 8

Probability function:  
0 1 2
X: 3 4 1
8 8 8
b)
1
P(X = 2 and X ≥ 1) P(X = 2) 8 1
P(X = 2|X ≥ 1) = = = = 5
P(X ≥ 1) P(X = 1) + P(X = 2) 4
+ 1
8 8

c)
3 4 1 3
E(X) = 0 · 8
+1· 8
+2· 8
= 4
€ Š2
3 4 1 3 7
V(X) = E(X 2 ) − E(X)2 = 02 · 8
+ 12 · 8
+ 22 · 8
− 4
= 16
Ç p
7
σ(X) = V(X) = 16 = 47
p