Exercise 1: Solvability of Linear Equation Systems Given the system of linear equation system: a +403 =b a +a-%, +273 =3 Qn, -2r, +2r3 =0 with a and b as parameter. For which values of a and b, the linear equation system (a) has a unique solution (determined)? (b) has an infinite number of solutions (underdetermined)? (c) is inconsistent (overdetermined)?Exercise 2: Markov process There are three fitness centers in Wiesbaden: Treff (T), Outback (O) and Vitafit (V). From one period to the other period the customers change the firms according to the graph below. The figures in the graph indicate the change of customers. For instance, 20% of the customers of Treff stay with Treff, 60% are going to Vitafit and 20% are going to Outback in the next period. (a) Assume that the market shares in period 1 (¢ = 1) are ny = 0.3, 9 = 04 und xy = 0.3. Calculate the market shares in the next period 2 (t = 2)? (b) Set up a system of linear equations in order to find the stationary state. Calculate the stationary state. What are the characteristics of a stationary state?¥ 0.6) v sg .Exercise 3: Cramer’s Rule Solve the following system using Cramer’s rule: 4, + Qe. + 32 Bx; + Ar, — Aes ay — 2x3Exercise 4: Economic Application of the Inverse Am investment bank con use thee risky assets (EON, BMW, and SAP), The return ofthe aseis depend on the ezonomic development (boom. recession, and iss) 4 with the following cash-Dow (in ©): BON BMW SAP bom ( SB As recossion ( 4 6 2 cis 3-52 ‘The matic reflects that EON generates a proit of € 5 per stock in a boom, € in times ofa reeesion, and a loss of € 3 inthe evs. The investment bank wants to generate rskfee coupons to hedge agains! the economic development (coupon stripping). Which asess does the bank have to sell (purchase) to gener ate acoupon with the cash flow of € Tin imes of rss bat cash-flow of € 0 in times ofa recession of hoom? Which asses does the bank have to sll (purchase) to generate a risk-fiee coupon which guaranties a profit of € | foreach economic development? To this end walculae the inverse of the matrix A, Wha isthe ramk ofthe matr A?Exercise 5: Extreme Values of Functions with Many Variables Calculate the extreme values of the function S(e.a,2) = le + xy — Grz + ty? + $22. Determine by means of the Hessian determinant the type (minimum or maximum) of the extreme values!Exercise 6: Linear Optimization [A company produces two products (I and 2). These 10 products must run ‘through machines A and #, Processing time (in hours) per unit ofthe products foreach machine as well as the capacities are given in the Following table: 6 ( Machine | Product I | Product 2 ‘A 4 3 B 6 3 Eg. product needs to be processed four hours on machine A und six hours on ‘machine B. Product | genoraos a profit of € 5, wheress product rwo generates & profit of € 10, Because of old contact, the company has to produce at least 20, “units of product 1 ‘Setup a linear equation system inorder to maximize the profit! Solve it using the ‘simplex method and interpret your result as wel as all lack variable.