REVISED_finite_sg.

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A d d i s o n - We s l e y’s
Finite Mathematics Review Linear Functions LEAST SQUARES LINE
1.
Steps in Gauss–Jordan elimination:
Write each equation so that variable terms are in the same
INVERSE OF A SQUARE MATRIX (n 3 n)
Definition of slope of a line: For data that are assumed to be linearly related, the least squares 1. Inverses exist only for square matrices.
y
line can be used to make predictions about the data points. The order on the left side of the equals sign and constants are on 2. The inverse of a square matrix A is written A-1.
The slope of a line is defined as (x2, y2)
¢y = y2 – y1 least squares line is the line y = mx + b that gives the best fit to the right.
the vertical change (the “rise”) (x1, y1) 3. A-1A = I and AA-1 = I , where I is the n * n identity
over the horizontal change (the ¢x = x2 – x1 the data points (x 1, y1), (x 2, y2), Á , (x n, yn). This line has slope 2. Write the augmented matrix that corresponds to the system.
Polynomials Properties of Rational Expressions m and y-intercept b that satisfy the equations: matrix.
A gx B m = gy
“run”) of the line. If the two x 3. Use row operations to transform the first column so that all
points (x 1, y1) and (x 2, y2) are nb + 1 0 0 Á 0
DEFINITIONS For all mathematical expressions, P, Q, R, and S, with Q, S Z 0: elements except the element in the first row are zero.
A gx B b + A gx2 B m = gxy
on a line, the slope of the 0 1 0 Á 0
Like terms: Terms having the same variable(s) and the same P PS 4. Use row operations to transform the second column so that
1. = (Fundamental Property of Rational Expressions) line is all elements except the element in the second row are zero. I = E0 0 1 Á 0 U
exponent on each variable Q QS
rise change in y ¢y y2 - y1 Correlation measures how good the least squares line is for pre- o o o ∞ 0
Polynomial: A term or a finite sum of terms in which all vari- P R P + R m = = = = . 5. Use row operations to transform the third column so that all
2. + = (Addition—must have same run change in x ¢x x2 - x1 dictive purposes. elements except the element in the third row are zero. 0 0 0 Á 1
ables have whole number exponents and no variables appear Q Q Q denominator)
in the denominator Slope of a horizontal line is zero. The coefficient of correlation, r, is a measure of the “goodness
6. Continue in this way until the last row is written in the form 4. To find A-1 for any n * n matrix A:
C 0 0 0 p 0 j ƒ k D , where j and k are constants.
of fit” to the prediction line:
n A gxy B - A gx B A gy B
Add/subtract polynomials: Add/subtract like terms. P R P - R Slope of a vertical line is undefined. i. Form the augmented matrix [A|I ], where I is the n * n
3. - = (Subtraction—must have same
Multiply polynomials: To multiply a monomial by a polyno- Q Q Q denominator) EQUATIONS OF LINES r = , - 1 … r … 1. 7. Multiply each row by the reciprocal of the nonzero element identity matrix.
4n A gx B - A gx B # 4n A gy B - A gy B
mial, use the distributive property to multiply each term of the 2 2 2 2 in that row so that the augmented matrix has been trans- ii. Perform row operations on [A|I ] to get a matrix of the
1. y = mx + b (slope–intercept form)
polynomial by the monomial. P#R PR formed to the form: form [I ƒ B].
4. = (Multiplication) 2. y - y1 = m(x - x 1) (point–slope form) r values close to 1 indicate the presence of a linear relationship,
To multiply two binomials, use the FOIL method (First Outer Q S QS 1 0 0 p 0 c1 iii. Matrix B is A-1.
3. x = k (vertical line) and the least squares line has positive slope.
Inner Last): (a + b)(c + d) = ac + ad + bc + bd. Then P R P#S 0 1 0 p 0 c2
combine any like terms. 5. (R Z 0) (Division—same as mutliplying 4. y k (horizontal line) r values close to -1 indicate the presence of a linear relation-
E 0 0 1 p 0 5 c3 U
, = = SOLVING MATRIX EQUATIONS
Q S Q R by the reciprocal of the divisor) ship, and the least squares line has negative slope.
Factoring polynomials: Write a polynomial as a product of PARALLEL AND PERPENDICULAR LINES m1 = m2 A linear system can be written as a matrix equation in the form
r values close to 0 show that there does not appear to be a linear 0 0 0 ∞ 0 o
other polynomials. AX = B; A is the coefficient matrix, B is the matrix of the con-
Parallel lines: Two nonvertical lines are parallel if and only if correlation between the data points. 0 0 0 p 1 cn
Special factorizations: they have the same slope: m 1 = m 2. stants, and X is the matrix of the variables.
1. x 2 - y 2 = (x + y)(x - y) (Difference of squares) Properties of Equality 8. The solution to the system is (c1, c2, c3, Á , cn). To solve the equation AX = B, multiply both sides of the equa-
Perpendicular lines: Two lines, neither of which is vertical, Matrices and Linear Systems
2. x 2 + 2xy + y 2 = (x + y)(x + y) = (x + y)2 1. If a = b, then a + c = b + c. (The same number may be tion by A-1: (A-1A)X = A-1B. Then X = A-1B.
are perpendicular if and only if their slopes have a product of
(Perfect square trinomial) added to both sides of an equation.) -1. (In other words, the slopes are negative reciprocals of one A system of linear equations has three possibilities for solutions: Matrices
3. x 2 - 2xy + y 2 = (x - y)(x - y) = (x - y)2 2. If a = b, then a # c = b # c, c Z 0. (The same number may another: m 1 = m1 2.) 1. It may have a unique solution (one solution). Linear Inequalities
Size of a matrix: Matrix A is an m * n matrix, that is, matrix A
be multiplied by both sides of an equation.) 2. It may be inconsistent (no solution).
(Perfect square trinomial) LINEAR FUNCTIONS has m rows and n columns. A linear inequality in two variables has one of the following
To solve an equation means to find the value for the variable 3. It may be dependent (infinitely many solutions).
4. x 3 - y 3 = (x - y)(x 2 + xy + y 2) (Difference of cubes) that makes the equation true. A relationship f, defined by y = f (x) = mx + b, for real num- TO ADD/SUBTRACT TWO MATRICES, A AND B forms:
5. x 3 + y 3 = (x + y)(x 2 - xy + y 2) (Sum of cubes) bers m and b, is a linear function.
TO SOLVE SYSTEMS OF LINEAR EQUATIONS
To solve linear equations: Isolate the variable by using the 1. Check that A and B have the same size. ax + by … c
above properties of equality. Use the properties of algebra to change, or transform, the system
2. Add/subtract corresponding elements. ax + by 6 c
To solve quadratic equations: The equation must first be writ- into a simpler equivalent system. A simpler equivalent system is
Properties of Exponents Applications of Linear Functions one that has the same solutions as the given system. ax + by Ú c
ten in standard form, ax 2 + bx + c = 0, where a, b, and c are MULTIPLYING A SCALAR BY A MATRIX
real numbers, a Z 0. Factor and use the zero factor property: If Transformations of a system: ax + by 7 c
For any integers: SUPPLY AND DEMAND FUNCTIONS The product of a real number k (called a scalar) and a matrix X
a and b are real numbers, with ab = 0, then either a = 0, 1. Exchanging any two equations. for real numbers a, b, and c, with a and b not both 0.
The supply function is a function that expresses a relationship is the matrix kX. To find the elements in kX, multiply each ele-
1. an = a # a # a # Á # a , if n is a natural number. b = 0, or both.
between the price p and the number of units of a commodity q
2. Multiplying both sides of an equation by a nonzero real
('''')''''* number. ment in X by k. GRAPHING LINEAR INEQUALITIES
n factors If a quadratic equation cannot be solved by factoring, use the
that a manufacturer is willing to supply. 3. Replacing any equation by a nonzero multiple of that equa-
For any integers m and n and any real numbers a and b for which quadratic formula: 1. Draw the graph of the boundary line. If the inequality has
The demand function is a function that expresses a relationship tion plus a nonzero multiple of any other equation. MULTIPLYING TWO MATRICES
the following exist: … or Ú , draw a solid line; if the inequality has < or >,
-b ; 2b 2 - 4ac between the price p and the number of units of a commodity q To multiply A and B:
2. am # an = am + n x = . GAUSS–JORDAN ELIMINATION draw a dashed line.
2a that consumers are willing to buy. 1. Check that the number of columns of A is the same as the num-
am The equilibrium point occurs when the supply function equals Gauss–Jordan elimination: The goal of Gauss–Jordan elimi- ber of rows of B. If A is an m * n matrix and B is an n * k 2. Decide which half-plane to shade (that is, above or below
3. = am - n the demand function. nation is to start with an augmented matrix and use row opera- matrix, the product of A and B will be an m * k matrix. the boundary line). To do this, choose any point not on the
an Properties of Radicals boundary line as a test point. If the test point satisfies the
The equilibrium quantity is the quantity at which supply = demand. tions to reduce the matrix to one that has 1’s along the main 2. To compute the ith row and jth column of matrix AB, multi-
4. (a m)n = a mn The equilibrium price is the price at which supply = demand. diagonal and zeros everywhere else. You can then read the ply each element in the ith row of A by the corresponding inequality, shade the half-plane that includes the test point.
5. (ab)m = a mb m For all real numbers a and natural numbers m and n such that solution from the last column of the final matrix. For example, If the test point does not satisfy the inequality, shade the
n n
element in the jth column of B and then add these products.
2a and 2b are both real numbers: COST, REVENUE, AND PROFIT FUNCTIONS AND for the final matrix half plane that does not include the test point.
a m am
a b = m
For example:
1. A 2a B n = a
n
6. n 2a n a BREAK-EVEN ANALYSIS
b b 4. = ,b Z 0 1 0 0 4 2 SYSTEMS OF INEQUALITIES
n
2b A b Cost function: C(x) = mx + b 3 0 5
-1
C 0 1 0 -3 S B
-1
R C4 7S =
2. 2a n = e
1 n ƒ a ƒ , if n is even = marginal cost # number of items The solution to a system of inequalities is made up of all the
7. a -n = n , if a is nonzero and n is positive. m n
5. 32a = 2a
mn
0 0 1 2 4 3 -2 points that satisfy all the inequalities of the system at the same
a a, if n is odd + fixed cost 0 6
n n n time.
For all real numbers a for which the indicated roots exist: 3. 2a # 2b = 2ab Revenue function: R(x) = px = price # number of items we have x = 4, y = -3, and z = 2, because this matrix repre-
-1 # 2 + 0 # 4 + 5 # 0 -1 # (-1) + 0 # 7 + 5 # 6
n sents the system: B R = To determine the solution to a system of inequalities, graph all the
8. a 1>n
= 2a Profit function: P(x) = R(x) - C(x) 4 # 2 + 3 # 4 + (-2) # 0 4 # (-1) + 3 # 7 + (-2) # 6 inequalities on the same axes and identify the region of overlap.
A2 aBm
1x + 0y + 0z = 4
9. a m>n = (a 1>n)m = 2a m =
n n

,!7IA3C1-dhedje!:t;K;k;K;k The break-even point occurs when R(x) = C(x), or P(x) = 0.

The number of units at which revenue = cost is the break-even
quantity. The corresponding ordered pair is the break-even point.
0x + 1y + 0z = -3
0x + 0y + 1z = 2.
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B
-2
20
31
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ISBN 0-321-37439-8
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A d d i s o n - We s l e y’s Finite Mathematics Review

Linear Programming Logic UNION RULE FOR SETS INDEPENDENT EVENTS 2. There are exactly two possible outcomes, success or failure. Mode: The most frequently occurring entry in the data set
The number of elements in the union of A and B, written E and F are independent events if P(E | F ) = P(E ) or 3. The repeated trials are independent. The outcome of any A statistic is a numerical measurement that describes a char-
Linear programming involves finding the optimum (maximum or RELATED CONDITIONAL STATEMENTS n(A ´ B), is given by n(A ´ B) = n(A) + n(B) - n(A ¨ B). P(F | E ) = P(F ). trial has no effect on the outcomes of the other trials of the acteristic of a sample. Statistics are random variables. The
minimum) value of a function (called the objective function) sub-
Direct statement: p:q (If p, then q.) experiment. median and sample mean are examples of statistics.
ject to given restrictions, or constraints. The constraints consist of
Converse: q:p (If q, then p.) UNION RULE FOR DISJOINT SETS PRODUCT RULE FOR INDEPENDENT EVENTS Binomial probability: The probability of x successes and
a system of linear inequalities. MEASURES OF VARIATION (OR SPREAD)
Inverse: ~p : ~q (If not p, then not q.) n(A ´ B) = n(A) + n(B) Events E and F are independent events if and only if (n - x) failures in n independent repeated trials, where p is the
To optimize a linear programming problem, use the corner
P(E ¨ F ) = P(E ) # P(F ). probability of a success, is Range: The difference between the largest and smallest num-
point method: Contrapositive: ~q : ~p (If not q, then not p.) ber in a sample
a b # p x # (1 - p)n - x.
n
1. Write the objective function and all necessary constraints. Probability BAYES’ THEOREM (SPECIAL CASE) Variance: The variance of n numbers x 1, x 2, Á , x n, with
2. Graph all constraints to find the feasible region (which is the SUMMARY OF BASIC TRUTH TABLES P(F ) # P(E | F )
x
mean x, is given by
A gx 2 B - nx 2
solution to the linear system of the constraints). 1. ~p, the negation of p, has the opposite truth value of p. VOCABULARY P(F | E ) = For binomial probability, the expected number of successes, E(x),
P(F ) # P(E | F ) + P(F ¿) # P(E | F ¿)
3. Identify all the points that are the corners of the feasible 2. p ¿ q, the conjunction, is true only when both p and q are Experiment: An activity or occurrence with an observable result in n trials is E(x) = np, where p is the probability of success. s2 = .
region. true. Trial: Each repetition of an experiment BAYES’ THEOREM (GENERAL) n - 1
4. Find the value of the objective function at each corner 3. p ¡ q, the disjunction, is false only when both p and q are Outcomes: Possible results of a trial P(F i) # P(E | F i)
RANDOM VARIABLES
Standard deviation: The standard deviation of n numbers
point. P(F i|E ) = A random variable is a function that assigns a real number to
false. Sample space: Set of all possible outcomes, denoted by S P(F 1) # P(E | F 1) + P(F 2) # P(E | F 2) + Á + P(F n) # P(E | F n) x 1, x 2, Á , x n, with mean x, is given by
each outcome of an experiment.
A gx 2 B - nx 2 .
5. For a bounded region, the solution is given by a corner 4. p : q, the conditional, is false only when p is true and q is
point producing the optimum value of the objective Event: A subset of a sample space MULTIPLICATION PRINCIPLE
false. s =
function. Suppose n choices must be made, with m 1 ways to make choice 1,
PROBABILITY DISTRIBUTION/PROBABILITY FUNCTION B
5. p 4 q, the biconditional, is true only when p and q have SET OPERATIONS FOR EVENTS n - 1
6. For an unbounded region, check that the solution actually and for each of these ways, m 2 ways to make choice 2, and so on, A table that lists all the possible values of a random variable and 2
the same truth value (both true or both false). Let E and F be events for a sample space S. s is called the sample variance, and s is called the sample
exists. If it does, it will occur at a corner point. with m n ways to make choice n. Then there are m 1 # m 2 # Á # m n their corresponding probabilities is called a probability
E ¨ F occurs when both E and F occur. (Intersection) different ways to make the entire sequence of choices. distribution. standard deviation. These values are also statistics and describe
Sets the sample. The population variance is denoted by s2, and the
Mathematics of Finance E ´ F occurs when E or F or both E and F occur. (Union)
FACTORIAL NOTATION PROPERTIES OF A PROBABILITY DISTRIBUTION population standard deviation is denoted by s. The population
SETS E¿ occurs when E does not occur. (Complement)
Simple interest: I = Prt (P: principal; r: annual interest n! = n(n - 1)(n - 2) Á (3)(2)(1); Note: 0! = 1. 1. The sum of the probabilities always equals 1. variance is the expected value of the sample variance. In other
rate; t: time in years) A set is a well-defined collection of objects. The empty set, writ- MUTUALLY EXCLUSIVE EVENTS 2. Each probability must be between 0 and 1 inclusive, that is, words, s2 = E(s 2), and s = 2s2.
ten as ¤, is a set containing no elements. PERMUTATIONS 0 … pi … 1.
Future value (simple interest): A = P(1 + rt) (A: future E and F are mutually exclusive events if E ¨ F = ¤. Standard deviation of a grouped distribution: The standard
value; P: principal; r: annual interest rate; t: number of years) Set A is a subset of set B (written A 8 B) if every element in A is A permutation is any specific ordering or arrangement of deviation for a distribution with mean x, where x is an interval
Future value (compound interest): A = P(1 + i)n, where also an element of B. BASIC PROBABILITY PRINCIPLE distinguishable objects (without repetition). EXPECTED VALUE midpoint with frequency f, and n = gf , is
A gfx 2 B - nx 2 .
i = mr and n = mt (A: future value; P: principal; r: annual Set A is a proper subset of B (written A ( B) if A 8 B and The number of permutations of n elements taken r elements at a Suppose a random variable x can take on the n values x 1, x 2, Á , x n.
Let S be a sample space of equally likely outcomes and let event E
interest rate; m: number of compounding periods per year; A Z B. time, where 1 … r … n, is Also, suppose the probabilities that these values occur are, s =
be a subset of S. Then the probability that event E occurs is B
t: number of years; n: number of compounding periods; n! respectively, p1, p2, Á , pn, then the expected value of the ran- n - 1
For any set A, ¤ 8 A and A 8 A. n(E ) number of outcomes in event E P(n, r) = . dom variable is E(x) = x 1 p1 + x 2 p2 + x 3 p3 + Á + x n pn.
i: interest rate per period) P(E ) = . Continuous distribution: A continuous distribution for a
A set of n distinct elements has 2n subsets.
= (n - r)!
n(S) number of outcomes in sample space S random variable is a distribution in which the outcomes can
Complement of a set: A¿ = E x|x x A and x H U F , where A is
r m Expected value gives the “average” value the random variable
Effective rate: re = a1 + b - 1 (r: stated interest rate; Note that 0 … P(E ) … 1.
Clue words: arrangement, schedule, order
takes on. take any real number within some interval. The graph of a
m If the n objects of a permutation are not all distinguishable (or continuous distribution is a curve.
m: number of compounding periods per year) any set and U represents the universal set.
UNION RULE FOR PROBABILITY unique)—that is, if there are n 1 of type 1, n 2 of type 2, and so on
A U for r different types, then the number of distinguishable permu- Statistics
Present value (compound interest): P = (P: pre- A' P(E ´ F ) = P(E ) + P(F ) - P(E ¨ F ) tations of these n objects taken r at a time is
The Normal Distribution
(1 + i)n A Random sample: To make inferences about a population, you
sent value deposited; A: future value; i: interest rate per period; PROPERTIES OF PROBABILITY n! may not be able to examine all the elements in the population.
. PROPERTIES OF THE NORMAL DISTRIBUTION
n: number of periods) Let S be a sample space consisting of n distinct outcomes n 1! n 2! # Á # n r!
# Instead, you take a sample from the population to determine 1. Its peak occurs directly above the mean m.
INTERSECTION OF SETS A AND B s1, s2, s3, Á , sn. An acceptable probability assignment consists characteristics of the entire population. In order for a sample to
Future value of an ordinary annuity: S = R # sn i or
E x|x H A and x H B F
COMBINATIONS be representative of the population, it must be a random sam- 2. The curve is symmetric about the vertical line x = m.
A¨B = of assigning to each outcome si a number pi (probability of si)
(1 + i)n - 1
d according to these rules: A combination is any arrangement of distinguishable objects ple. In a random sample, every member of the population is 3. The curve never touches the x-axis—it extends indefinitely
S = Rc U
i without regard to order. equally likely to be selected. in both directions.
A 1. The probability of each outcome is a number between 0 and 1,
B 4. The area under the curve is always 1 (because the sum of
(S: future value of the annuity; R: payment; i: interest rate per inclusive.
The number of combinations of n distinguishable objects taken r MEASURES OF CENTRAL TENDENCY the probabilities in any distribution is 1).
period; n: number of periods) 2. The sum of the probabilities of all outcomes is 1: gx
at a time, denoted by C(n, r) or a b and where 0 … r … n, is
UNION OF TWO SETS n
p1 + p2 + Á + pn = 1 Mean: The mean of the n numbers x 1, x 2, Á , x n is x = .
E x|x H A or x H B F
Present value of an annuity: P = R # an i or r n THE STANDARD NORMAL DISTRIBUTION
A´B =
m = 0 and s = 1
d
-n
1 - (1 + i)
C (n, r) = a b =
CONDITIONAL PROBABILITY n n! Mean of a grouped distribution: The mean of a distribution,
P = Rc U .
i P(E | F ), which means the probability that E occurs given that F r (n - r)! r! The normal curve table will give probabilities for the standard
A B where x represents the midpoints, f the frequencies, and normal distribution.
(P: present value of the annuity; R: payment at the end of consec- has already occurred, is computed as follows: gx f
C(n, r) or a b is read as “n choose r.”
n
utive interest periods; i: interest rate per period; n: number of P(E ¨ F ) n = gf , is x = . z-score: This is the key to finding areas under any normal
P(E | F ) = , where P(F ) Z 0 r n
payments) DISJOINT SETS curve. The z-score for any x is the number of standard devia-
P(F ) Clue words: group, committee, set, sample x is often called the sample mean and m = E(x) is called the
P Pi Sets A and B are disjoint sets if A ¨ B = ¤. tions that x lies above or below the mean.
Amortization payments: R = = population mean.
an i 1 - (1 + i)-n PRODUCT RULE OF PROBABILITY BINOMIAL PROBABILITY If a normal distribution has a mean m and a standard deviation of
Median: The middle entry in a set of ordered data if the number
A B P(E ¨ F ) = P(F ) # P(E | F ) or P(E ¨ F ) = P(E ) # P(F | E ) A binomial experiment must satisfy the following conditions: of entries in the set is odd, or the mean of the two middle entries x - m
more➤ s, then the z-score for that number x is z = .
1. The experiment is repeated a fixed number of times. in a set of ordered data if the number of entries in the set is even s
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