A stock analyst tracks three companies with stock pricesf(t)=40+t+t2 −t3/10, g(t) = 7 + t −...

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).

Solutions

Expert Solution

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

milcah answered 1 year ago

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