Chapter 13
Solutions for Selected Exercises
Abstract This chapter presents the solutions to many of the end-of-chapter exercises. Numerical solutions with sample code in MATLAB, where applicable, can be
found in the Electronic Supplementary Material.
In this chapter we present solutions to most end-of-chapter exercises. For many solutions, the accompanying MATLAB code is available in the external supplementary
material (ESM) from this book’s web page at https://doi.org/10.1007/978-3-03063643-2_13.
The solutions below are referenced by the chapter and exercise number, separated
by a dot.
Exercise 2.1
1992, G. Soros shorted the pound by selling 10
10 £ with the promise to buy them
back later. The British bank had to buy all those pounds in order to stay within certain
margins of the exchange rate with respect to the German Mark. It was required to do so
after having previously joined the European exchange rate mechanism. The British
central bank could not counter this onslaught and, in the end, had to devalue the
British pound by almost 10%, which brought Soros a 10% profit on this 10 billion £
gamble.
Exercise 2.5
DAX: Deutsche Börse Aktiengesellschaft (AG), is a publicly owned joint stock
company. NYSE: the Intercontinental Exchange (ICE) is a company that owns stock
exchanges, the NYSE among them. They are listed at the NYSE. Stockholm: owned
by NASDAQ, Inc, which is a financial company that operates stock exchanges, the
NASDAQ in New York among them, where NASDAQ Inc. is listed.
Exercise 2.6
A person who owns a fully paid item, say a stock, has the long position. Conversely,
a person who owes the stock to someone else or has sold it, is short of the stock. Thus
Electronic supplementary material The online version of this chapter
(https://doi.org/10.1007/978-3-030-63643-2_13) contains supplementary material, which is
available to authorized users.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021
V. Ziemann, Physics and Finance, Undergraduate Lecture Notes in Physics,
https://doi.org/10.1007/978-3-030-63643-2_13
233
Solutions for Selected Exercises
Abstract This chapter presents the solutions to many of the end-of-chapter exercises. Numerical solutions with sample code in MATLAB, where applicable, can be
found in the Electronic Supplementary Material.
In this chapter we present solutions to most end-of-chapter exercises. For many solutions, the accompanying MATLAB code is available in the external supplementary
material (ESM) from this book’s web page at https://doi.org/10.1007/978-3-03063643-2_13.
The solutions below are referenced by the chapter and exercise number, separated
by a dot.
Exercise 2.1
1992, G. Soros shorted the pound by selling 10
10 £ with the promise to buy them
back later. The British bank had to buy all those pounds in order to stay within certain
margins of the exchange rate with respect to the German Mark. It was required to do so
after having previously joined the European exchange rate mechanism. The British
central bank could not counter this onslaught and, in the end, had to devalue the
British pound by almost 10%, which brought Soros a 10% profit on this 10 billion £
gamble.
Exercise 2.5
DAX: Deutsche Börse Aktiengesellschaft (AG), is a publicly owned joint stock
company. NYSE: the Intercontinental Exchange (ICE) is a company that owns stock
exchanges, the NYSE among them. They are listed at the NYSE. Stockholm: owned
by NASDAQ, Inc, which is a financial company that operates stock exchanges, the
NASDAQ in New York among them, where NASDAQ Inc. is listed.
Exercise 2.6
A person who owns a fully paid item, say a stock, has the long position. Conversely,
a person who owes the stock to someone else or has sold it, is short of the stock. Thus
Electronic supplementary material The online version of this chapter
(https://doi.org/10.1007/978-3-030-63643-2_13) contains supplementary material, which is
available to authorized users.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021
V. Ziemann, Physics and Finance, Undergraduate Lecture Notes in Physics,
https://doi.org/10.1007/978-3-030-63643-2_13
233