Explain the deterministic volatility in an option-pricing
Explain the deterministic volatility in an option-pricing.
Expert
The deterministic volatility surfaces is the concept that volatility is not constant, or though, only a function of time, but an identified function of stock price and time, σ(S, t). Now there the word ‘known’ is a bit misleading. What we really understand are the market prices of vanilla options, a snapshot at one immediate in time. Now we should figure out the correct function σ(S, t) that the theoretical value of our options matches the market prices. It is mathematically an inverse problem; essentially get the parameter, knowing several solutions, volatility and market prices. That model may capture the volatility surface exactly at an instant in time, but this does an extremely poor job of capturing the dynamics, which is, how the data change along with time.
Give explanation: Trade credit is free credit.
What is Static Hedging?
Explain the Jump-diffusion models in an option-pricing.
Review a current article on strategic planning from a business journal. The article should have been published within the last 3 years. The review is to include full bibliographical information for the article being reviewed and any other referenced material; discuss in scholarly detail a summary of
The discussion of zero-coupon bonds in the text gave an instance of two zero-coupon bonds issued through Commerzbank. The DM300, 000,000 issues due in the year of 1995 sold at 50 percent of face value and the DM300, 000,000 due in the year of 2000 sold a
Describe Gresham’s Law.This law refers to the phenomenon that bad (abundant) money drives good (scarce) money out of circulation. This sort of phenomenon was frequently observed under the bimetallic standard under which gold and silver bot
In brief define each of the major types of international bond market instruments, noting their distinguishing characteristics.The major kind of international bond instruments & their distinguishing characteristics are as follows:
What is Sharpe ratio?
Depict the risks confronting an interest rate & currency swap dealer.An interest rate & currency swap dealer confronts several distinct types of risk. Interest rate risk refers to interest rates altering unfavourably before the swap dea
Elaborate the statement: Coefficient of variation is a better risk calculator to use than the standard deviation when estimating the risk of capital budgeting projects.
18,76,764
1954950 Asked
3,689
Active Tutors
1458015
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!