European calls, puts value with strike and expiration value
Explain the relationship between the European calls, puts value with similar strike and expiration value.
Expert
C − P = S − Ke−r(T−t)
This relationship, in among European calls (value C) and puts (value P) with similar strike (K) and expiration (T) valued at time t is an effect of a simple arbitrage argument. When you buy a call option, at similar time write a put and sell stock short. When the stock is above the strike at expiration therefore you will have S − K by the call, 0 by the put and −S by the stock. A total sum of −K. If the stock is below the strike at expiration you will have 0 from the call, −S again from the stock, and −(K − S) from the short put. Again a total sum of −K. Therefore, whatever the stock price is at expiration such portfolio will all the times be worth −K, a guaranteed amount. Because this amount is guaranteed we can discount this back to the present. We should have C − P − S =−Ke−r(T−t).
This is put–call parity.
How many forms are in Margin Hedging contained?
Explain functional form of coefficients in Monte Carlo method.
Explain Girsanov’s Theorem in briefly.
In brief discuss the cause & the solution(s) to the international bank crisis involving less developed countries.The international debt crisis started on August 20, 1982 while Mexico asked more than 100 U.S. and foreign banks to forgive its
Illustrates the way to optimize hedge.
Who described the criteria which make a risk measure coherent?
Illustrates the formula of Rho for the foreign exchange option value?
Explain swap broker ? A swap broker arranges a swap among two counterparties for fee without taking a risk position within the swap.
Alpha and Beta Companies can borrow at the below given rates. &nb
What are the reasons that Inventory is sometimes thought of as a needed evil.
18,76,764
1959427 Asked
3,689
Active Tutors
1430076
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!