Lesson 2

In the toy market, the factor for ALP is \[w^{5}+z^{4}w^{1}+z^{8}w^{3}.\] The three terms correspond to buying \(0,1,2\) shares. Similarly, BET contributes \(w^{5}+z^{6}w^{1}+z^{12}w^{7}\).

Multiplying all factors would list all possible share vectors. We do not have to expand the whole polynomial by hand. The key point is conceptual: the exponent of \(z\) remembers money spent, and the exponent of \(w\) remembers tracking error.