Financial analysts use graphical models to predict stock values for a new stock. A brand new stock
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Financial analysts use graphical models to predict stock values for a new stock. A brand new stock is also called an IPO (initial public offering). When a stock is first issued it sells for more than it is really worth. One model for a class of Internet IPO's predicts the percent overvaluation of a stock as a function of time as R(t) = 250[(t2/2.7183t)], where R(t) is the overvaluation in percent and t is the time in months after the initial issue of the stock.
- Use the information provided by the first derivative, second derivative and asymptotes to prepare advice for clients as to when they should expect a signal to prepare to buy or sell (inflection point), the exact time when they should buy or sell (local max/min) and any false signals prior to a horizontal asymptote. Explain your reasoning.
- Make a sketch without using a graphing calculator. Show all the steps your used to sketch it with accuracy.
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