Explain numerical integration in numerical method
Explain numerical integration in numerical method.
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Infrequently one can write down the solution of an option-pricing problem within form of a numerous integral. It is as you can interpret the option value like an expectation of a payoff, and also an expectation of payoff is mathematically only the integral of the product of which payoff function and a probability density function. It is only possible in particular cases. The option has to be European, the underlying stochastic differential equation should be explicitly integrable (therefore the lognormal random walk is ideal for that) and the payoff shouldn’t generally be path dependent. So when this is possible then pricing is simple... you have a formula. The only complexity comes in turning this formula in a number. And which is the subject of numerical integration or quadrature.
Describe how to calculate the overall balance and discuss its significance.The overall BOP is finding out by computing the cumulative balance of payments by including the current account, capital account, and the statistical discrepancies. The n
Great Corporation has the following capital situation. Debt: One thousand bonds were issued five years ago at a coupon rate of 11%. They had 20-year terms and $1,000 face values. They are now selling to yield 9%. The tax rate is 37% Preferred stock: Two thousand shares of preferred are outstanding
Otobai Motor Company is currently paying a dividend of $1.40 per year. The dividends are expected to grow at a rate of 18% for the next three years and then a constant rate of 5% thereafter forever. What is the vlaue of its current stock price? Assuming that the discount rate is 10%.{Hint: pages 84-
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