In: Math
A stock analyst tracks three companies with stock
pricesf(t)=40+t+t2 −t3/10,
g(t) = 7 + t − t2 + t3/5, and
h(t) = 15 + t − t2/2 + t3/10 − t4/200,
t months into the year.
A monthly buy recommendation is due at the end of August, so t = 8.
The analyst believes in ‘momentum investing’ and looks for
companies with stock prices that are concave upwards at the time of
the recommendation. Which company is recommended?
(a) Neither of the three tracked companies. (b) All three of the
tracked companies.
(c) The company with stock price g(t).
(d) The company with stock price h(t).
(e) The company with stock price f(t).
Solution-
Find the value of the second differentiation to find out the curvature of the functions, if it is positive than concave upward, if negative than concave downward and if zero points of inflection.
for f,
Find the value at t = 8
For g,
at t=8
For h,
at t=8
Therefore, g company satisfies the condition so it is recommended.
The company with stock price g(t).
Option c is correct