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.
What are the difference between CAPM and APT?
If the cost benefit of interest rate swaps would probably be arbitraged away in competitive markets, what other explanations present to explain the rapid development of the interest rate swap market?All kinds of debt instruments are not always o
How much will transaction costs decrease the profit?
Explain valid criticisms of Value at Risk.
Explain how portfolio’s value for realization calculated? Give an example.
Illustrates an example of probability of coin willing to bet?
Define the term correct delta with an example?
Illustrates the family members of the GARCH?
Illustrates that the put–call parity is a model-independent relationship.
What are the ways to choose the members of the board of directors of a corporation? Who do these board members owe their primary allegiance?
18,76,764
1935257 Asked
3,689
Active Tutors
1436305
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!