Explain Decision features in finite-difference method
Explain the term Decision features in finite-difference methods.
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Decision features: In early exercises, chooser features and instalment premiums are all illustrations of embedded decisions saw in exotic contracts. Coping along with these numerically is rather straightforward using finite-difference methods, making such numerical techniques the natural ones for that contract. The dissimilarity between an American and a European option is about three lines of code in a finite-difference program and below a minute’s coding.
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