MATH 1821 Mathematical Methods For Actuarial Science I: Basic Concepts

MATH 1821: Mathematical Methods for Actuarial Science I Chapter 1: Basic Concepts
MATH 1821
Mathematical Methods for Actuarial Science I
Chapter 1
Basic Concepts
Department of Mathematics, HKU
1
Chapter 1: Basic Concepts

A Functions (I)
B Functions (II)
C Trigonometry (I)
D Trigonometry (II)
E Complex numbers
Part A: Functions (I) 2

A1. Definition
You are probably familiar with notations of functions such as

1
f (x) = x 2 + 1 and g (x) = .
log2 x
In this course we would like to have a more formal definition. For any sets X and
Y , we say that f is a function from X to Y , denoted f : X → Y , if it provides a
rule which assigns to every element x ∈ X exactly one element y ∈ Y .
Part A: Functions (I) A1. Definition 3

A1. Definition
In many cases, a function f : X → Y can be represented by a single formula of the

form y = f (x) where f (x) is an expression in x. This enables us to specify, for
each x ∈ X , exactly one element y ∈ Y . An example is the function f : R → R
defined by f (x) = x 2 + 1.
A function can be thought of as a machine which produces an output y ∈ Y for
every input x ∈ X :

A1. Definition
A function f : X → Y can also be defined graphically as follows (especially if X

and Y are finite). This suggests why a function is also called a mapping.
f : X Y
1 3
4
2
6
3
8
4 10

A1. Definition
The two relations below are not functions from X to Y . Why not?
(a) (b)
f : X Y f : X Y

A2. Domain, codomain and range
In defining a function f , theoretically we have to specify two sets X and Y . They

are called the domain and codomain of f respectively. In this course, X and Y are
subsets of R most of the time (and we assume so unless otherwise specified). The
domain of f is sometimes abbreviated as dom f .
In practice, we often define a function informally by a single formula. In this case
we can adopt a natural domain which is the largest subset of R for which the
√
formula is well defined. For example, the natural domain of f (x) = x + 2 is
. Sometimes there may also be a restricted domain if there is a story behind
the function.
Part A: Functions (I) A2. Domain, codomain and range 7

The range of a function f : X → Y is the set {f (x) : x ∈ X }. In other words it is

the ‘set of all possible outputs’. If X is not explicitly specified then we may just
take it to be the natural domain.
√
For example the range of the function f (x) = x + 2 is .

The graph of a function f is a plot of all points (x, f (x)) where x ∈ dom f on the
√
coordinate plane. For example the graph of f (x) = x + 2 is as follows:
y = f (x)
How can we read the (natural) domain and range of a function from the graph?

A3. Piecewise-defined functions
In some cases a function cannot be represented by a single formula. For instance,

consider the tax system in a country in which the tax rate is 10% on the first
$10000 income, 20% on the next $10000 income and 30% on the rest. If x
denotes the income and f (x) denotes the amount of tax payable (both in dollars),
then we have

0.1x

 if 0 ≤ x ≤ 10000
f (x) = 1000 + 0.2(x − 10000) if 10000 < x ≤ 20000

3000 + 0.3(x − 20000)

if x > 20000
Part A: Functions (I) A3. Piecewise-defined functions 10

A3. Piecewise-defined functions
The absolute value function is another example of a piecewise-defined function.

Indeed, we may write (
if
|x| =
if
Part A: Functions (I) A3. Piecewise-defined functions 11

A4. Odd and even functions
A function f is said to be
odd if f (−x) = −f (x) for all x;
even if f (−x) = f (x) for all x.
For positive integer n, is the function f (x) = x n odd or even?

Can you think of other examples of odd functions and even functions?
Part A: Functions (I) A4. Odd and even functions 12

A4. Odd and even functions
How does the graph of odd functions and even functions look like?
Part A: Functions (I) A4. Odd and even functions 13

A5. Increasing and decreasing functions
A function f (x) is said to be

increasing if a > b implies f (a) ≥ f (b);
strictly increasing if a > b implies f (a) > f (b);
Intuitively, this means x and f (x) change in the same direction.
Likewise, a function f (x) is said to be
decreasing if a > b implies f (a) ≤ f (b);
strictly decreasing if a > b implies f (a) < f (b);
This means x and f (x) change in opposite directions.
Part A: Functions (I) A5. Increasing and decreasing functions 14

Examples:
f (x) = 2x − 1 Increasing / Decreasing
f (x) = 4 − x Increasing / Decreasing
f (x) = 14 x 2 Increasing / Decreasing

It often happens that a function is increasing y

somewhere and decreasing elsewhere. We can
y = 14 x 2
say that a function f is increasing on I (where
I is an interval) if f (a) ≤ f (b) whenever a < b
and a, b ∈ I (and similarly for decreasing and
strictly increasing/decreasing).
For example, the function f (x) = 14 x 2 is
x
strictly increasing in and strictly
decreasing in .

A6. Random variables
A special type of functions that are frequently used in probability and statistics is
random variables.
In a random experiment, a random variable X is a function X : Ω → R, where Ω
denotes the sample space, which is the set of all possible outcomes of the
experiment.
For example, suppose a coin is tossed 5 times. If we let X be the number of heads
obtained, then X is a random variable.
Part A: Functions (I) A6. Random variables 17


A Functions (I)
B Functions (II)
C Trigonometry (I)
D Trigonometry (II)
E Complex numbers
Part B: Functions (II) 18

B1. Image and preimage
Let f : X → Y be a function.
For S ⊆ X , the image of S under f , denoted by f (S), is the set
{f (x) : x ∈ S}.
f : X Y
f −1 (T )
S f (S)
Part B: Functions (II) B1. Image and preimage 19

Let f : X → Y be a function.
For T ⊆ Y , the preimage of T under f , denoted by f −1 (T ), is the set
{x ∈ X : f (x) ∈ T }.
f : X Y
f −1 (T ) Tf −1 (T )
f (S)

As an example, consider the function f (x) = (x − 2)2 and U = [1, 9]. Then
f (U) =
f −1 (U) =

B2. Injective and surjective functions
Let f : X → Y be a function. That means for each x ∈ X , there corresponds

exactly one element (which is denoted by f (x)) in Y .
However, it is not required that every element in Y corresponds to exactly one
element in X . Hence an element in Y may correspond to more than one element
of X , or to no element of X at all.
f : X Y
1 3
4
2
6
3
8
4 10
Part B: Functions (II) B2. Injective and surjective functions 22

Let f : X → Y be a function. We say that f is

injective if for any x1 6= x2 we have f (x1 ) 6= f (x2 )
surjective if for any y ∈ Y there exists x ∈ X for which f (x) = y .
Intuitively,
f is injective means no element in Y corresponds to more than one element of
X;
f is surjective means no element in Y corresponds to no element of X .

If the function f (x) = x 2 injective? Is it surjective?

Solve the following equation. Why does it have anything to do with what we are
discussing?
log10 (3x − 1) = 1 + log10 (x + 2)

A function f : X → Y which is both injective and surjective is said to be bijective.

A bijective function leads to a one-to-one correspondence between elements of X
and Y .
f : X Y

B3. Composition of functions
Let f : X → Y and g : Y → Z be functions. This naturally corresponds to a

function from X to Z . Such a function is called the composition of g and f ,
denoted by g ◦ f . Formally, we have (g ◦ f )(x) = g (f (x)).
g ◦ ff :: X g: Y Z
Part B: Functions (II) B3. Composition of functions 27

B4. Inverse functions
Inverse problems are very common in mathematics. One example is factorisation,

which is the inverse of expansion.
Similarly, the inverse operation of squaring is . In terms of
functions, we are looking for another function that can reverse or undo the original
operation.
Part B: Functions (II) B4. Inverse functions 28

Formally, we have the following definition.

Let f : X → Y be a function. We say that a function g : Y → X is the inverse of
f , denoted g = f −1 , if
(g ◦ f )(x) = x for all x ∈ X and (f ◦ g )(y ) = y for all y ∈ Y
Remarks:
Do not confuse the notation f −1 (y ) for y ∈ Y with f −1 (T ) for T ⊆ Y .
√
Define f : R → R by f (x) = x 2 . Can we say f −1 (x) = x?

We state the following result without proof.
Let f : X → Y be a function. Then the inverse function f −1 exists if and only

if f is bijective.
In case f is not bijective, we can restrict f to X 0 ⊆ X over which f is injective.

Setting f (X 0 ) = Y 0 ⊆ Y , the function f˜ : X 0 → Y 0 is bijective and hence has an
inverse. Can you illustrate with the function f : R → R defined by f (x) = x 2 ?

In practice, we can find the inverse of f by ‘solving the equation’ f (f −1 (x)) = x.

For example, if f (x) = 2x + 3, then f −1 (x) = .
How are the graph of a function and that of its inverse related?


A Functions (I)
B Functions (II)
C Trigonometry (I)
D Trigonometry (II)
E Complex numbers
Part C: Trigonometry (I) 32

C1. Radian measure
In elementary mathematics, angles are usually measured in degrees. What does a

degree mean?
Part C: Trigonometry (I) C1. Radian measure 33

C1. Radian measure
In advanced mathematics, another unit, radian, is usually used for angles

(particularly in calculus, because some results will be correct only in radians but
not in degrees). What does a radian mean? What are the notations?

C1. Radian measure
How to convert between the two different units of measuring angles?

C1. Radian measure
Suppose there is a sector with radius r and angle θ (in radians). Then we can work
out its arc length s and area A as follows:
r
θ

C2. Cotangent, secant and cosecant
For an acute angle θ, we all know how to define sin θ, cos θ and tan θ. We can
likewise define the cotangent, secant and cosecant functions (often abbreviated as
cot, sec and csc) as follows.
a b
sin θ = cos θ =
c c
c a
a tan θ = cot θ =
b
θ sec θ = csc θ =
b
Note that tan2 θ + 1 = sec2 θ and similarly .
Part C: Trigonometry (I) C2. Cotangent, secant and cosecant 37

More generally, we can define the six trigonometric functions of any angle θ using
a unit circle centred at the origin. With θ in standard position, suppose the
terminal side intersects the unit circle at (x, y ). Then we define
(x, y )
sin θ = y cos θ = x
θ
y
tan θ = cot θ =
x
sec θ = csc θ =

Here is the graph of y = cot x. What is the domain and range of the function?
y
5
x
− 52 π −2π − 32 π −π − 12 π 1
2π π 3
2π 2π 5
2π
−5

Here is the graph of y = sec x. What is the domain and range of the function?
y
x
−3π − 52 π −2π − 32 π −π − 12 π 1
2π π 3
2π 2π 5
2π 3π
−5

Here is the graph of y = csc x. What is the domain and range of the function?
y
5
x
− 52 π −2π − 32 π −π − 12 π 1
2π π 3
2π 2π 5
2π
−5

C3. Inverse trigonometric functions
How do you find θ if sin θ = 0.8?

As the sine function is not injective, the answer is not unique. However, if we
restrict the domain to [− π2 , π2 ], the function is injective and the range is still
[−1, 1].
Part C: Trigonometry (I) C3. Inverse trigonometric functions 42

For x ∈ [−1, 1], we define the arcsine of x, denoted by sin−1 x or arcsin x, to be

the (unique) value of θ ∈ [− π2 , π2 ] such that sin θ = x. How does the graph of
y = sin−1 x look like?

Similarly, we can define the functions

cos−1 : [−1, 1] → [0, π]
tan−1 : R → (− π2 , π2 )
We can also define the functions cot−1 , sec−1 and csc−1 but they are less
commonly used. Can you express them in terms of sin−1 , cos−1 and tan−1 ?


A Functions (I)
B Functions (II)
C Trigonometry (I)
D Trigonometry (II)
E Complex numbers
Part D: Trigonometry (II) 45

D1. Compound angle formulas
With the aid of the figure below, we can work out a formula for sin(A + B):
A B
Part D: Trigonometry (II) D1. Compound angle formulas 46

D1. Compound angle formulas
Using the formula for sin(A + B), we can further work out the following formulas:
sin(A − B) = sin A cos B − cos A sin B
cos(A + B) = cos A cos B − sin A sin B
cos(A − B) = cos A cos B + sin A sin B
tan A + tan B
tan(A + B) =
1 − tan A tan B
tan A − tan B
tan(A − B) =
1 + tan A tan B
Part D: Trigonometry (II) D1. Compound angle formulas 47

D2. Double and triple angle formulas
Using the compound angle formulas, we can work out the following double-angle
formulas:
sin 2A = 2 sin A cos A
cos 2A = cos2 A − sin2 A = 2 cos2 A − 1 = 1 − 2 sin2 A
2 tan A
tan 2A =
1 − tan2 A
Part D: Trigonometry (II) D2. Double and triple angle formulas 48

D2. Double and triple angle formulas
We can then likewise work out the following triple-angle formulas:
sin 3A = 3 sin A − 4 sin3 A
cos 3A = 4 cos3 A − 3 cos A
3 tan A − tan3 A
tan 3A =
1 − 3 tan2 A
Part D: Trigonometry (II) D2. Double and triple angle formulas 49

D3. Half angle formulas
Using the formula for cos 2A, we can work out the following half-angle formulas:
A 1 − cos A
sin2 =
2 2
A 1 + cos A
cos2 =
2 2
A 1 − cos A
tan2 =
2 1 + cos A
Part D: Trigonometry (II) D3. Half angle formulas 50

D4. Product-to-sum formulas
Using the compound angle formulas, we can work out the following
product-to-sum formulas:
1
sin A cos B = [sin(A + B) + sin(A − B)]
2
1
sin A sin B = [cos(A − B) − cos(A + B)]
2
1
cos A cos B = [cos(A − B) + cos(A + B)]
2
Part D: Trigonometry (II) D4. Product-to-sum formulas 51

D5. Sum-to-product formulas
We can then work out the following sum-to-product formulas:

A+B A−B
sin A + sin B = 2 sin cos
2 2

A+B A−B
sin A − sin B = 2 cos sin
2 2

A+B A−B
cos A + cos B = 2 cos cos
2 2

A+B A−B
cos A − cos B = −2 sin sin
2 2
Part D: Trigonometry (II) D5. Sum-to-product formulas 52


A Functions (I)
B Functions (II)
C Trigonometry (I)
D Trigonometry (II)
E Complex numbers
Part E: Complex numbers 53

E1. Conjugates
Recall that the set of complex numbers is C = {a + bi : a, b ∈ R}, where i is the

imaginary unit satisfying i 2 = −1. You should be able to carry out the four basic
arithmetic operations on C. For example, we can compute
6 + 5i
4 + 3i
For a complex number of the form z = a + bi (note that in writing a complex

number in this form, it is implicitly assumed that a and b are real), we define
z = a − bi to be the conjugate of z.
Part E: Complex numbers E1. Conjugates 54

E1. Conjugates
For any complex numbers z and z 0 , it is easy to verify that

z ± z0 = z ± z0
zz 0 = z · z 0
z z
0
= 0 provided that z 0 6= 0
z z
z + z is real
z − z is purely imaginary
zz = |z|2 , where |z| denotes the modulus of z

E1. Conjugates
Consider the quadratic equation ax 2 + bx + c = 0, where a, b, c ∈ R with a 6= 0. If

b 2 − 4ac < 0, then the equation has two distinct complex roots that are
conjugates of each other.
We have the following more generalised result.
Let f (x) be a polynomial with real coefficients. If f (z) = 0 for some z ∈ C,

then f (z) = 0.

E2. Polar form
The representation z = a + bi is said to be in standard form. We can represent

this complex number on the Argand diagram that naturally corresponds to the
point (a, b) in the rectangular coordinate system.
y Im
(a, b) a + bi
x Re
Part E: Complex numbers E2. Polar form 57

E2. Polar form
We can also change the rectangular coordinates (a, b) to polar coordinates (r , θ)

where the two ordered pairs are related by a = and b = .
This enables us to rewrite z = a + bi as z = , which is known as the
polar form of z. Sometimes this is abbreviated as z = r cis θ.
π/2 π/2
3π/4 (a, b) π/4 3π/4 a + bi π/4
π 0
π 0
0 1 2 3 4 0 1 2 3 4
5π/4 7π/4 5π/4 7π/4
3π/2 3π/2
Part E: Complex numbers E2. Polar form 58

E3. Computing with polar form
Consider two complex numbers z1 = r1 cis θ1 and z2 = r2 cis θ2 . Then we have

z1 z2 = r1 r2 cis(θ1 + θ2 )
z1 r1
= cis(θ1 − θ2 ) provided that z2 6= 0
z2 r2
This enables us to carry out computations easily. For instance, what is (1 + i)100 ?
Part E: Complex numbers E3. Computing with polar form 59

E4. Euler’s formula
For θ ∈ R, we define
e iθ = cos θ + i sin θ
and this is sometimes known as Euler’s formula.
Furthermore, for any z ∈ C with z = a + bi, we define e z = e a (cos b + i sin b). It
can be checked that such definition preserves the index laws that we are familiar
with, e.g. it can be checked that
0 0
e z+z = e z e z for any z, z 0 ∈ C.
Part E: Complex numbers E4. Euler’s formula 60

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MATH 1821: Mathematical Methods for Actuarial Science I Chapter 1: Basic Concepts

Department of Mathematics, HKU

Chapter 1: Basic Concepts

Part A: Functions (I) 2

You are probably familiar with notations of functions such as

Part A: Functions (I) A1. Definition 3

In many cases, a function f : X → Y can be represented by a single formula of the

Part A: Functions (I) A1. Definition 4

A function f : X → Y can also be defined graphically as follows (especially if X

Part A: Functions (I) A1. Definition 5

Part A: Functions (I) A1. Definition 6

A2. Domain, codomain and range

In defining a function f , theoretically we have to specify two sets X and Y . They

Part A: Functions (I) A2. Domain, codomain and range 7

A2. Domain, codomain and range

The range of a function f : X → Y is the set {f (x) : x ∈ X }. In other words it is

Part A: Functions (I) A2. Domain, codomain and range 8

A2. Domain, codomain and range

Part A: Functions (I) A2. Domain, codomain and range 9

A3. Piecewise-defined functions

In some cases a function cannot be represented by a single formula. For instance,

Part A: Functions (I) A3. Piecewise-defined functions 10

A3. Piecewise-defined functions

The absolute value function is another example of a piecewise-defined function.

Part A: Functions (I) A3. Piecewise-defined functions 11

A4. Odd and even functions

For positive integer n, is the function f (x) = x n odd or even?

Part A: Functions (I) A4. Odd and even functions 12

A4. Odd and even functions

Part A: Functions (I) A4. Odd and even functions 13

A5. Increasing and decreasing functions

A function f (x) is said to be

Part A: Functions (I) A5. Increasing and decreasing functions 14

A5. Increasing and decreasing functions

Part A: Functions (I) A5. Increasing and decreasing functions 15

A5. Increasing and decreasing functions

It often happens that a function is increasing y

Part A: Functions (I) A5. Increasing and decreasing functions 16

A6. Random variables

Part A: Functions (I) A6. Random variables 17

Chapter 1: Basic Concepts

Part B: Functions (II) 18

B1. Image and preimage

Part B: Functions (II) B1. Image and preimage 19

B1. Image and preimage

Part B: Functions (II) B1. Image and preimage 20

B1. Image and preimage

Part B: Functions (II) B1. Image and preimage 21

B2. Injective and surjective functions

Let f : X → Y be a function. That means for each x ∈ X , there corresponds

Part B: Functions (II) B2. Injective and surjective functions 22

B2. Injective and surjective functions

Let f : X → Y be a function. We say that f is

Part B: Functions (II) B2. Injective and surjective functions 23

B2. Injective and surjective functions

If the function f (x) = x 2 injective? Is it surjective?

Part B: Functions (II) B2. Injective and surjective functions 24