Solution

ID: past-exam-of-the-probability-statistics-and-options-i-course-of-the-university-of-oxford/2007/f/1/solution

The required condition is . The implicit function theorem then gives a unique local differentiable branch with and
The denominator remains nonzero after shrinking the neighborhood by continuity.
For the specified smooth function,
At both equal one, so the condition holds and . Differentiate twice:
At zero, , , and . Consequently
The additional derivatives exist because this particular is smooth; the general first-derivative theorem only requires the stated continuous first partial derivatives.

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