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An analyst in a financial institution specializes in 10 stocks. These stocks are thought to be effecting each other (for example price fluctuation in one,
An analyst in a financial institution specializes in 10 stocks. These stocks are thought to be effecting each other (for example price fluctuation in one, results in price increase in another). The analyst applies various theorems of Economics and simplifies the connections to a system: A: an 10x10 matrix. b: a column vector containing the average prices for the 10 stocks for last month. A b: gives the estimated average prices for these stocks for next month. The analyst prepares the b vector for the 7th month, multiplies with A and gets c vector for the 8th month. But shortly after realizes she has made a small mistake in averages for the 7th month and fixes the mistake. B is the vector of correct 7th month averages, multiplied with A, y is the new estimate for the 8th month. The analyst notices that even though the difference between b and B is minuscule and insignificant, the difference between c and y is unacceptably large. If the matrix A has been calculated correctly, what might be causing this issue and how can the issue be diagnosed? Explain in your own words, copy paste answers will get 0. Do not give your answer in paragraphs, explain in an itemized fashion.. At most 3-4 items, every item only a single sentence. An analyst in a financial institution specializes in 10 stocks. These stocks are thought to be effecting each other (for example price fluctuation in one, results in price increase in another). The analyst applies various theorems of Economics and simplifies the connections to a system: A: an 10x10 matrix. b: a column vector containing the average prices for the 10 stocks for last month. A b: gives the estimated average prices for these stocks for next month. The analyst prepares the b vector for the 7th month, multiplies with A and gets c vector for the 8th month. But shortly after realizes she has made a small mistake in averages for the 7th month and fixes the mistake. B is the vector of correct 7th month averages, multiplied with A, y is the new estimate for the 8th month. The analyst notices that even though the difference between b and B is minuscule and insignificant, the difference between c and y is unacceptably large. If the matrix A has been calculated correctly, what might be causing this issue and how can the issue be diagnosed? Explain in your own words, copy paste answers will get 0. Do not give your answer in paragraphs, explain in an itemized fashion.. At most 3-4 items, every item only a single sentence
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