Explain exotic or over-the-counter contracts
Explain exotic or over-the-counter (OTC) contracts.
Expert
These are not traded actively; they may be unique to you and your counterparty. These instruments need to be marked to model. And this clearly raises the question of that model to use. Generally in this context the ‘model’ implies the volatility, whether in FX or fixed income and equity markets.
Explain the terms: diversifiable and non-diversifiable risk. Which one is more important to financial managers in business firms?
Explain possible future paths for an asset, proposed by Boyle Phelim.
What is the Black–Scholes Equation?
What are the benefits of “paying late” and how do companies try to do this?
Why cash flows and accounting profits are not considered the same thing.
Define one feature of co-integration for dynamic relationship?
A stock whose value is now $44.75 is growing on average by 15 percent per annum. Its volatility is 22 percent. The interest rate is 4 percent. You need to value a call option along with a strike of $45, expiring in two months’ time. So, what can you do?
When was quantitative finance the domain of either economists or applied mathematicians?
Which numerical method should we use?
Explain Treasury bill and risk involved with it.
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