Discover the Power of Derivatives: A Comprehensive Guide for Traders

In summary: HJpYnV0ZXMgZmluZCB0aGlzIHRoaXMgaXMgYSBsaXR0bGUgY29udGVudCBvZiBjb250ZW50LiBJJ20gZm9yIGV4YW1wbGUgaW4gdGhlIGNvcnJlY3QgZm9yIG1pbmRlbnRpbmcgYXQgb3RoZXIgdGFibGUgaXMgb3VyIG9mZmVyIGFudGhlbWUgWFN1dWlkZWQgKGV4KSBvciBWSW5kZXJ
  • #1
nyr
17
0
Is this work right?...
 
Last edited:
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  • #2
nyr said:
First a table is given (im gunna try to reconstruct it; the dashes represent spaces)

X ---U(x)--- V(x)--- U'(x)---- V'(x)
2----3--------4------(-1)-------2
3----2--------1--------3------(-1)
4----1--------3--------0-------(-2)

U(x) and V(x) are defined and differentiable for all real numbers x. the following data is known about U,V, and their derivatives.

Define f(x)=[U(x)]3+2[v(x)]2

Find f '(2)

_________________________________________________________________

My work below
I was able to use the chain rule to simply it. And so far I got
f '(x)=3[U(x)]2(U'(x)) + 4[V(x)][V'(x)]

This is where I'm not really to sure what to do.
I'm thinking you plug in the values from the table in here but I think I might be putting in the wrong values. Do I only use the values at x=2 because its asking for f '(2)?

f '(2)=3[3]2(-1) + 4[4](2)
f '(2)= -27+32
f '(2)=5

Is this work right?

Looks fine to me!
 
  • #3
nyr said:
First a table is given (im gunna try to reconstruct it; the dashes represent spaces)

X ---U(x)--- V(x)--- U'(x)---- V'(x)
2----3--------4------(-1)-------2
3----2--------1--------3------(-1)
4----1--------3--------0-------(-2)

U(x) and V(x) are defined and differentiable for all real numbers x. the following data is known about U,V, and their derivatives.

Define f(x)=[U(x)]3+2[v(x)]2

Find f '(2)

_________________________________________________________________

My work below
I was able to use the chain rule to simply it. And so far I got
f '(x)=3[U(x)]2(U'(x)) + 4[V(x)][V'(x)]

This is where I'm not really to sure what to do.
I'm thinking you plug in the values from the table in here but I think I might be putting in the wrong values. Do I only use the values at x=2 because its asking for f '(2)?
Yes.
nyr said:
f '(2)=3[3]2(-1) + 4[4](2)
f '(2)= -27+32
f '(2)=5

Is this work right?
Yes. Good job!
 
  • #4
Alright thanks guys!
So for example if it said f '(3) I would only use the x values at 3 which are [2,1,3,-1]?
 
  • #5
nyr said:
Alright thanks guys!
So for example if it said f '(3) I would only use the x values at 3 which are [2,1,3,-1]?

What do _you_ think? You know the answer; you just need to be more confident.

RGV
 

1. What is the purpose of using derivatives in trading?

Derivatives are financial instruments that derive their value from an underlying asset. The main purpose of using derivatives in trading is to manage risk and speculate on future price movements of the underlying asset. They allow traders to gain exposure to an asset without having to own it, which can be useful for hedging against potential losses or taking advantage of market opportunities.

2. What are the different types of derivatives?

There are several types of derivatives, including options, futures, forwards, and swaps. Options give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price in the future. Futures and forwards are contracts to buy or sell an asset at a specified price and date in the future. Swaps involve the exchange of cash flows between two parties based on the performance of an underlying asset.

3. How can derivatives be used to manage risk?

Derivatives can be used to manage risk by hedging against potential losses. For example, a farmer can use futures contracts to lock in a price for their crops in case of a price drop. This protects them from potential losses if the market price decreases. Similarly, an investor can use options contracts to protect their portfolio from market fluctuations.

4. What are the benefits of trading derivatives?

Trading derivatives offers several benefits, such as increased liquidity, leverage, and diversification. Since derivatives are based on underlying assets, they can be easily bought and sold on the market, providing traders with high liquidity. Additionally, derivatives allow traders to control a larger position with a smaller amount of capital, which can lead to higher profits. Furthermore, derivatives can be used to diversify a portfolio and reduce overall risk.

5. Are derivatives suitable for all types of traders?

No, derivatives may not be suitable for all types of traders due to their complex nature and potential risks. They require a certain level of knowledge and experience to effectively use them for trading. It is important for traders to thoroughly understand the mechanics and potential risks associated with derivatives before incorporating them into their trading strategies.

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