Original practice · fully worked
Original variant: most likely instrument recovery time
For a positive recovery time t, an instrument has density equal to one sixth of the product of one plus t and an exponential decay factor with exponent negative t/2. The density is zero otherwise. Calculate the mode.
- A
0 - B
0.5 - C
1 - D
2 - E
10/3
Answer and calculation
The log-density derivative is the reciprocal of one plus t, minus one half. It vanishes at time 1 and changes from positive to negative there, so the recovery-time mode is 1 and choice C.
Setup
Setup
The normalizing factor is positive and constant, so maximize the density kernel.
h(t)=(1+t)e−t/2,t>0 logh(t)=log(1+t)−2t Model
Model
Differentiate the log-density; it has the same maximizing locations as the density.
dtdlogh(t)=1+t1−21 1+t1=21⟹t=1 Compute
Compute
The derivative is positive before one and negative after one, proving a unique maximum.
1+t1−21>0(0<t<1) 1+t1−21<0(t>1) Answer
Answer
A recovery time of one unit is the modal value.
1(C)