Instruction

(a) In this competition it’s crucial that you work in teams and cooperate!
(b) The competition will last until one of the following happens:
• 15 teams submit their solutions, or
• 2 hours pass.
(c) You have to solve each exercise, and when you do so show it to the assistant. They will quickly verify your
solution and provide you with the next round of questions if there are no mistakes. Otherwise you have
to correct the mistakes before proceeding further.

(d) There will be between 6 and 8 rounds, depending on how smoothly it goes.
(e) All derivations have to be provided as usual. Feel free to use all resources and ask for hints (if time
allows you to do so).
Good luck!
Round 1
Compute the following expressions and simplify them. Show your actual computations.

(a) p
f (x) = x ln(2x),

(b) r
√
q
f (x) = x+ x + x.

(c)
√
Z
x x + 1dx,

(d) Z e
x2 ln(x)dx.
1

Solution 1
(a)
ln(2x) + 1
f 0 (x) = p .
2 x ln(2x)

(b)
 !
1 1 1
f 0 (x) = q √ 1+ p √ 1+ √ .
p
2 x+ x 2 x
2 x+ x+ x

(c)
√ 2
u = x, du = dx, dv = x + 1dx, v = (x + 1)3/2
3
√
Z Z
2 2 2 4
x x + 1dx = x(x + 1)3/2 − (x + 1)3/2 dx = x(x + 1)3/2 − (x + 1)5/2 + C.
3 3 3 15

(d)
ln x = u
Ze 1 Ze
2 x dx = du x3 x3 1 e3 x3 e3 e3 1 2e3 1
x ln xdx = 2 = ln x |e1 − dx = − |e1 = − + = +
x dx = dw 3 3 x 3 9 3 9 9 9 9
1 x3 1
3 =w

2
Round 2
(a) Negate the following statement: (∀x ∈ R, ∃(y, z) ∈ R2 : y < x < z).
(b) Look at the following statements and determine if they are logically equivalent:
¬(p ∧ q) ⇒ (p ∨ r), ¬(p ∨ q) ⇒ (p ∧ r)
2
(c) Prove that Sn = 13 + 23 + . . . n3 = (1 + 2 + · · · + n) for all natural numbers n.

Solution 2
(a) (∃x ∈ < : ∀(y, z) ∈ <2 , x 6 y or x > z).
(b) No, consider the following truth table:

p q r p∧q ˜(p∧q) p∨r p∨q ˜(p ∨ q) p∧r ˜(p ∧ q) → (p ∨ r) ˜(p ∨ q) → (p ∧ r)

T T T T F T T F T T T
T F T F T T T F T T T
F T T F T T T F F T T
F F T F T T F T F T F
T T F T F T T F F T T
T F F F T T T F F T T
F T F F T F T F F F T
F F F F T F F T F F F

(c) The base of induction for n = 1 obviously holds: S1 = 13 = 12 .

2
The inductive step: suppose that Sk = 13 + 23 + . . . k 3 = (1 + 2 + · · · + k) for some k.
3 2
We need to show that Sk+1 = 13 + 23 + . . . +k 3 + (k + 1) = (1 + 2 + · · · + k + k + 1) .
2 2 2
Indeed, Sk+1 = (1 + 2 + · · · + k + k + 1) = (1 + 2 + · · · + k) + 2 (1 + 2 + · · · + k) (k + 1) + (k + 1) =(∗)
2 2 2 2 2 2
(1 + 2 + · · · + k) +2 k(k+1)
2 (k + 1)+(k + 1) = (1 + 2 + · · · + k) +k(k + 1) +(k + 1) = (1 + 2 + · · · + k) +
3 3 3 3 3
(k + 1) =(∗∗) 1 + 2 + . . . +k + (k + 1) .
n(n+1)
In (∗) we used the result 1 + 2 + · · · + n = 2 . In (∗∗) we applied the induction hypothesis for Sk . Thus
we conclude that Sn holds for all n.
Round 3
Are the following statements true or false? Briefly justify your answers.

(a) A square matrix A of order n is invertible if and only if the determinant of the matrix is greater than zero.
(b) The row rank of matrix A is equal to the row rank of AT .
(c) Considering an inhomogeneous system of equations Ax = b. If det(A) = 0, then the system has an infinite
number of solutions.

(d) Consider a proposition Π of the form A ⇒ B (if the hypothesis A holds, conclusion B holds). The converse
of A ⇒ B is the statement B ⇒ A and the contrapositive of A ⇒ B is ∼ B ⇒∼ A.
(e) Let A and B be matrices of same dimension. Then tr(AB) = tr(BA).
P∞ n
(f) log(1 + x) = n=1 (−1)n+1 xn for |x| < 1.

Solution 3
(a) False, the determinant of a matrix invertible can be negative.

(b) True, row rank is equal to the column rank (Proposition 2.5).
(c) False, the system can be inconsistent (Algorithm 2.5)
(d) True, (Definition 1.22).

(e) By Taylor’s Theorem

∞
X f (k) (y)
f (y + h) = hk .
k!
k=0

If assume that f (y + h) = log(y + h), y = 1, h = x, then

f (0) (y) 0
h = log(y)
0!
f (1) (y) 1 h1 h
h = =
1! y 1! y
f (2) (y) 2 2
h 1 h2
h = − 2 =− 2
2! y 2! 2y
f (3) (y) 2 3
h 1 h 3
h = 2 3 = 3
3! y 3! 3y
...
f (k) (y) k hk
h = (−1)k+1
k! ky k
...
∞ ∞
X xk X
k+1 x
k
log(1 + x) = log(1) + (−1)k+1 = (−1)
k1k k
k=1 k=1

So it’s true.
Round 4
Consider a matrix A:  
−2 −1 4
A= 2 1 −2  .
−1 −1 3

(a) Compute the eigenvalues of A.

(b) Compute the eigenvector that corresponds to any eigenvalue.

(c) Compute the determinant of A. Hint: use the computed eigenvalues.
(d) Compute det((A−1 )3 ). Hint: no need to compute the inverse.

Solution 4
(a) The eigenvalues of A−1 are [−1; 1; 2].
√ √ √ √ √ √ √
(b) The eigenvectors are v̂1 = (1/ 2, −1/ 2, 0)0 , v̂2 = (−1/ 2, 0, −1/ 2, )0 , v̂3 = (−1/ 3, −1/ 3, 1/ 3)0 .
(c) det(A) = −2.
(d) The eigenvalues of (A−1 )3 are [−1, 1, 1/8] and so det((A−1 )3 ) = −1/8.
Round 5
Compute the following limits:
(a) √ √
23x−3 x
lim √ .
x→0 sin 3 x

(b)
ex − 1 − x
lim
x→0 x2

Solution 5
(a)
√ √ 0−0
23x−3 x
lim √ = 0
x→0 sin 3 x Apply L’Hopital rule
2 − 23 1 1 2
3x − 32 x− 2 2 − 12 x− 2 + 3
= lim √ 2 = lim √
x→0 cos 3 x ∗ 1 x− 3 x→0 cos 3 x
3
1
2 − 21 x 6 2−0
= lim √ = = 2.
x→0 cos 3 x cos 0

ex −1−x
(b) lim x2 = ” 00 ”
x→0

L’Hopital rule:

f (x) = ex − 1 − x and g(x) = x2 and f 0 (x) = ex − 1 and g 0 (x) = 2x

f (x) f 0 (x) ex −1
lim = lim 0 = lim = ” 00 ”
x→0 g(x) x→0 g (x) x→0 2x

L’Hopital rule:

f (x) = ex − 1 and g(x) = 2x

f 0 (x) = ex and g 0 (x) = 2

f (x) f 0 (x) ex 1
lim = lim 0 = lim =
x→0 g(x) x→0 g (x) x→0 2 2
Round 6
The price of a zero-coupon bond with face value F and maturity T as a function of the interest rate r is given by

F
P (r) = .
(1 + r)T

We are interested in examining the behavior of the bond price when the interest rate changes from its initial value
r0 to r1 = r0 + ∆r.

(a) Compute the first- and second-order derivatives of P (r). How would you interpret these derivatives (that
is, consider their signs and effects)?
(b) State the Taylor’s theorem for P (r1 ). Compute the first- and second-order approximation of P (r) at r1 .
What happens to the second-order term in the Taylor’s expansion when ∆r is close to 0?

(c) Prove that the actual bond price P (r1 ) is always larger than its first-oder approximation when ∆r is greater
than 0. What does your result imply for approximating bond prices using Taylor’s expansion? Hint: consider
the sign of the second-order term.

Solution 6
−F T T (T +1)
(a) P 0 (r) = (1+r) 00
T +1 and P (r) = (1+r)2 P (r). We could consider the first derivative as measuring the sensi-

tivity of bond’s price to changes in interest rates, while the second derivative captures the rate at which
that sensitivity changes for different levels of r.
(b) Taylor’s theorem:

dP (r) 1 d2 P (r)
P (r1 ) = P (r0 ) + (r1 − r0 ) + (r1 − r0 )2 + . . . .
dr r=r0 2 dr2 r=r0

First-order approximation:
−F T
P (r1 ) = P (r0 ) + ∆r.
(1 + r0 )T +1
Second-order approximation:

−F T 1 T (T + 1) F
Pb(r1 ) = P (r0 ) + ∆r + (∆r)2 .
(1 + r0 )T +1 2 (1 + r0 )2 (1 + r0 )T

Clearly when ∆r is close to 0, the approximation is close to the actual price P (r1 ).
(c) To show that P (r1 ) > P (r1 ) it suffices to note that the second-order term in the Taylor’s expansion in
always nonnegative. This means that the first-order approximation of the bond price always undervalues
the actual price!
Round 7
(a) Determine all possible values of determinant for an orthogonal matrix and for an idempotent matrix.
(b) Explain if there exist two orthogonal matrices A and B such that
 
−1 0 0
ABA3 B 3 =  0 −1 0  .
0 0 −1

Solution 7
By definition of orthogonal matrix A we have AT A = I. Applying properties of determinant we obtain det AT A =
2
det AT · det A =(det A ) =det I = 1 . Thus det A = ±1 . By definition of idempotent matrix A we have AA = A.
2
Applying properties of determinant we obtain det AA = det A · det A = (det A ) =det A. Thus det A = 0 or
det A = 1 .
3 3
Such orthogonal matrices A and B don’t exist. Indeed, det ABA3 B 3 = detA · det B · (det A ) · (det B ) =
4 4
(det A ) (det B ) = 1 (remember that det A = ±1 , det B = ±1 ). But determinant of the matrix on the right
is equal −1.
Round 8
Prove that if a + b + c ≥ 1, then a ≥ 1/3 ∨ b ≥ 1/3 ∨ c ≥ 1/3. Prove it indirectly i.e. if you have to prove
A ⇒ B, then show ¬B ⇒ ¬A.

Solution 8
We prove this by indirect method (¬B ⇒ ¬A).
We have
A : a+b+c≥1

B : a≥1∨ b≥1∨ c≥1

So
Not A : a + b + c < 1
Not B : a < 1/3 ∧ b < 1/3 ∧ c < 1/3

It is easy to see that

(¬B ⇒ ¬A) ⇔
1 1 1
⇔ (a < 1/3 ∧ b < 1/3 ∧ c < 1/3) ⇒ a + b + c < + + = 1
| {z } | 3
{z 3 3 }
Not B
Not A
.
Round 9
Compute the following expression:
x = a + b + c,
where:
• a is the number of steps in the stairs from the ground floor to the first floor in Synathlon;
• b is the number of full professors in the Department of Finance at HEC;
• c is the number of seats in this classroom.