Explain exotic option-value of option pricing method
Explain exotic option’s value of option pricing method.
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Avellaneda and Par´ as defined an exotic option’s value as the highest possible marginal value for which contract when hedged with any or all obtainable exchange-traded contracts. The result was which the method of option pricing also came along with its own technique for static hedging with many options. Previous to their work the only result of an option pricing model was its delta and value, only dynamic hedging was theoretically essential. With this new idea, theory became a main step closer to practice.
The other result of this technique was which the theoretical price of an exchange-traded option accurately matched its market price. This convoluted calibration of volatility surface models was redundant.
XYZ explained the difference between intrinsic value and book value in terms of the money spent on a college education. Please provide another example using a different simile.
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ABC Corp is issuing a 10-year bond with a coupon rate of 7 %. The interest rate for similar bonds is at present 9 %. Supposing annual payments, what is the current value of the bond? (Round to the closest dollar.) (a) $872 (b) $1,066 (c) $990 (d) $945. Discover Q & A Leading Solution Library Avail More Than 1436228 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1928365 Asked 3,689 Active Tutors 1436228 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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