Suppose You Observe Three Star Clusters

question 61

Essay

Suppose you observe three star clusters. Cluster 1 has a main-sequence turnoff point at spectral type G, Cluster 2 has a turnoff point at spectral type A, and Cluster 3 has a turnoff point at spectral type B. Which cluster is youngest and which is oldest? Explain why. What is the approximate age of the oldest cluster?

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Definitions:

Exercise Price

The set price at which an option's holder has the right to purchase or sell the asset in question.

Intrinsic Value

The true or inherent value of a financial asset, based not on market price but on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

Pure Discount Bond

A type of bond that is issued at a discount to its face value, pays no interest, and is redeemed at its face value at maturity.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk of financial loss, typically represented by the yield on government bonds.