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This was what I wanted to say in my previews questions. I need a real life example that can be solved only with linear transformation. I will be verry grateful if you can give me a problem and it' s solution. Bun I really need a "real life application". I cound't find what I wanted anywhere and I hope that maybe this time I was more specific.

Teodora Mircea
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  • You were given several examples in your two old questions. How often do you want to ask this question again? – Jan May 23 '20 at 08:20
  • Also: https://math.stackexchange.com/questions/3687122/practical-problem-for-linear-transformation – Jan May 23 '20 at 08:22
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    Suppose 3 gallons of gas cost $7.50. Now what's the price of 10 gallons? – Michael Hoppe May 23 '20 at 09:43

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When I was in finance I would use linear transformations to map each security I might own to a set of risk-factor loadings.

Then use these factor loadings at the security level to find the risk-factors for a portfolio of securities.

Use a variance-covariance matrix to take these factors to a find an expected variance for my portfolio.

Then do the same thing for my benchmark and find an expected tracking error to the benchmark.

Each of these is a linear transformation.

Doug M
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