Define an example to Hedge
Define an example to Hedge?
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You buy a call option, this could go up or down in value depending upon whether the underlying goes up or down. Therefore now sell some stock short. When you sell the right amount short then any rises or falls in the stock position will balance the falls or increases in the option, decreasing risk.
Who illustrated short-term interest rate through a stochastic differential equation?
What are the main problems with real probabilities to price derivatives?
Why do you think closed-end country funds frequently trade at a premium or discount?CECFs trade at premium or discount since capital markets of the home & host countries are segmented, preventing cross-border arbitrage. If cross-border arbit
Explain in brief the non-diversifiable risk and ways to measure it?
A risk-adjusted discount rate improves capital budgeting decision making compared to using a single discount rate for all projects. Explain.
Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax 40% Firm is proposing to buy the new plant that could generate extra annual profit of Rs. 10,000. The fixed cost of new plant is expected to Rs. 4000. New plant would increase sales volume by Rs. 40,00
Explain normal distribution model proposed by Louis Bachelier.
Why is structural approach to modelling risk of default born?
State the term dispersion trading?
Give an example of restrictive covenants that could be given in a bond’s indenture?
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