Find the Maximum and Minimum Values of the Quadratic Form

question 9

Essay

Find the maximum and minimum values of the quadratic form
subject to the constraint

.

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Definitions:

Floating-Rate Bonds

Bonds whose coupon payment may vary over time. The coupon rate is usually linked to the rate on some other security, such as a government bond, or to some other rate, such as the prime rate or LIBOR.

Inflation

The rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling.

Interest Rates

The rate at which a lender charges a borrower for asset usage, calculated as a percentage of the principal sum.

Market Value

The current price at which an asset or service can be bought or sold in a marketplace.