Solution: Penalty Values by Hand

Exercise: Penalty Values by Hand

Solution

The L1 penalty is $2+1+0.5=3.5$. The squared L2 penalty is $4+1+0.25=5.25$.

Takeaways

• State the assumption that makes the method valid before trusting the result.
• Connect the computation back to the finance workflow, not only to the code.
• Check whether the result depends on average-case behaviour, validation design, or numerical safeguards.