Explain exotic option-value of option pricing method
Explain exotic option’s value of option pricing method.
Expert
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.
Shawna desires to invest her recent bonus in a 4-year bond which pays a coupon of 11 % semi-annually. The bonds are selling at $962.13 nowadays. When she buys such bond and holds it to the maturity, what would be her yield? (Round to the nearest answer.) (i) 11.5%&nbs
The market risk premium is difference among the historical return upon the stock market and the risk-free rate, for yearly. Why is this negative for some years?
Which data is the most suitable for finding betas?
A middle income worker, with a dependent spouse older than the normal retirement age, retired in January 2004. In the year prior to retirement, her gross monthly earnings were $1,500. Her Social Security pension benefit is $1,000 per month. Prior to retirement, she was subject to total taxes on her
Financial Management: It means organizing, planning, directing and controlling the financial activities like procurement and use of funds of enterprise. This means exerting general management principles to the financial resources of enterprise. <
Long-Term Financing Needed : - At year-end 2012, total assets for Ambrose Inc. were $1.2 million and accounts payable were $375,000. Sales, which in 2012 were $2.5 million, are expected to increase by 25% in 2013. Total ass
A financial consultant obtains various valuations of my company when this discounts the Free Cash Flow (FCF) as opposed to when this uses the Equity Cash Flow. Is it correct?
Universal Corporation has the following dividend policy: if the earnings after taxes are less than $1 million, the dividend payout ratio will be 35%, but if these earnings are over $1 million, the dividend payout ratio will be 45%. The EBIT of Universal for next year
Regarding the WACC which has to be applied to a project, must it be an expected return, the average historical return or an opportunity cost on similar projects?
What is the importance and the utility of the given formula: Ke = DIV(1+g)/P + g?
18,76,764
1922083 Asked
3,689
Active Tutors
1428711
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!