The Mathematicians and Economists Who Have Been Hired by Wall

question 58

Multiple Choice

The mathematicians and economists who have been hired by Wall Street firms to build mathematical models to aid the pricing of derivatives are generally referred to as

• A)speculators.
• B)hedgers.
• C)rocket scientists.
• D)market makers.

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Definitions:

Constant Elasticity

A condition where the elasticity, or responsiveness, of a variable does not change regardless of the level of the variable being examined.

Linear Demand

A market demand situation where a product's price and the quantity demanded have a linear relationship.

Curve

In economics, it typically refers to a graphical representation showing the relationship between two variables.

Cross Elasticity

The responsiveness of the demand for one good to a change in the price of another good.