Explain drawbacks of Brownian motion
Explain drawbacks of Brownian motion.
Expert
One of the unfortunate characteristics of Brownian motion is that this provides returns distributions with tails which are unrealistically shallow. During practice, asset returns have tails which are much fatter than those specified by the normal distribution of Brownian motion. There is even several evidence that the distribution of returns has infinite second moment. In spite of this, and the existence of financial theories which do incorporate such fat tails, Brownian motion is easily the most common model used to shown random walks in finance.
Who explained the credit instruments explosion?
Whereas you were visiting London, you purchased a Jaguar for £35,000, payable in three months. You have sufficient cash at your bank in New York City that pays 0.35% interest per month, compounding monthly, to pay for the car. At present, the spot exchan
Explain the features of Brownian motion.
We focus more on cash flows rather than profits when estimating proposed capital budgeting projects. Explain.
How can we approximately calculate expected incremental cash flows for a proposed capital budgeting project?
Good fellow national bank decided to compete with a savings and loan by offering 30 year fixed rate mortgage loans at 8% annual interest. It plans to obtain the money got the loans by selling one year 6% CD to it's depositors. During first year of operation, good fellows sold it's depositors 1,000,0
You are an investment banker advising a Eurobank regarding a new international bond offering it is considering. The proceeds are to be utilized to fund Eurodollar loans to bank clients. What sort of bond instrument would you suggested that the bank consi
Normal 0 false false
Define agent and his responsibilities.
Determine the efficiency of Monte Carlo method.
18,76,764
1954539 Asked
3,689
Active Tutors
1444305
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!