Add random numbers, find normal, multiply, is it important
While you have some random numbers for adding, get normal them then multiply them, is it important in finance?
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This is significant in finance because a stock price after a long period can be thought of like its value on several starting day multiplied by many random numbers, each showing a random return. Therefore, whatever the distribution of returns is, the logarithm of the certain stock price will be normally distributed. We tense to suppose that equity returns are normally distributed, and equities, equivalently themselves are lognormally distributed.
What is the Capital Asset Pricing Model?
Your firm have just issued five year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4%. Describe the amount of first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is at present 7.2%?Solution:
Illustrates an example of Arbitrage?
Explain the procedure of bringing a new international bond issue to market.A borrower desiring to increase funds through issuing Eurobonds to the investing public will contact an investment banker and ask it to serve as lead manager of an underw
9. Define: a) Conversion ratio b) Conversion value c) Straight bond value in relation to a convertible bond.
Why is dispersion trading become unsuccessful?
What is the meaning of “U.S. dollar weakens in the foreign exchange market”?
Where are Monte Carlo simulations used?
Illustrates an example of Option Adjusted Spread. Answer: Analyses by using Option Adjusted Spreads are common within Mortgage-Backed Securities (MBS).
The riskiness of portfolios should be looked at in a different way than the riskiness of individual assets. Explain.
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