Explain number of dimensions in finite-difference methods
Explain the term number of dimensions in finite-difference methods.
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Number of dimensions: Is there any strong path dependence within the payoff? Is the contract an option at a single underlying or various? Answers to such questions will find out the number of dimensions in the problem. At the extremely least we will have two dimensions: asset (S or r), and time (t). Finite-difference methods cope very well with smaller no. of dimensions, up to four, as. Above that they get quite time consuming.
Explain Capital Asset Pricing Model (CPM).
Tabulate the advantages of the flexible exchange rate regime. The advantages of the flexible exchange rate system comprise: (I) automatic attainment of balance of payments equilibrium and (ii) maintenance of national policy autonomy.
B. Show how Kareem's WACC would change if the tax rate dropped to 25 percent and the estimated cost of equity capital were based on a risk-free rate of 7 percent, a market risk premium of 8 percent, and a systematic risk measure or beta of 2.0.
How is Value of a Contract solved?
What is Crash Metrics?
How is Sharpe ratio calculated?
Illustrates an example of delta hedging.
Explain the purpose of alpha and beta in Capital Asset Pricing Model.
Explain the term Serial Autocorrelation.
Describe the advantages of investing by international mutual funds? The advantages of investing by international mutual funds comprise: (1) save transaction/information costs,
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