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Bernoulli inequality for integer powers

Question

Show that for every real x>−1x>-1 and every integer n≥2n\ge2, (1+x)n≥1+nx(1+x)^n\ge1+nx.

Short answer

Induction. For n=2n=2, (1+x)2=1+2x+x2≥1+2x(1+x)^2=1+2x+x^2\ge1+2x. If it holds for nn, multiply by 1+x>01+x>0: (1+x)n+1≥(1+nx)(1+x)=1+(n+1)x+nx2≥1+(n+1)x(1+x)^{n+1}\ge(1+nx)(1+x)=1+(n+1)x+nx^2\ge1+(n+1)x.

Adapted from Zhou, A Practical Guide to Quantitative Finance Interviews, sec. 3.4 Important Calculus Methods, 'Taylor's series B', p.42; question and answer rewritten by SelfMadeQuant.com.

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