Explain the first method of calibration
Explain the first way of calibration if we can’t measure that parameter.
Expert
Let’s see the first process in action. Examine, possibly, equity data to try to calculate what volatility is. The problem along with it is that this is necessarily backward looking, by using data from the past. It might not be relevant to the future. The other problem with it is that it might give prices which are inconsistent with the market. For illustration, you are interested in buying a certain option. But you think volatility is 27%, therefore you use that number to price the option and the price you determine is $15. Although, the market price of that option is $19. You can either choose that the option is incorrectly priced or which your volatility estimate is wrong.
What is the Capital Asset Pricing Model?
Banks determine it essential to accommodate their client's needs to purchase or sell foreign exchange forward, in several instances for hedging purposes. How can the bank abolish the currency exposure it has formed for itself by accommodating a client's forw
Explain what is a Monte Carlo method?
Boeing Company is expecting to have EBIT next year of $10 million, with a standard deviation of $5 million. Boeing has $40 million in bonds with coupon of 8%, selling at par, which are being retired at the rate of $3 million annually. Boeing also has 200,000 shares of preferred stock, which pays ann
What is Vega Hedging?
How is the risk into portfolio measured in Crash Metrics?
What is Attribution?
Illustrates an example relates with risk that defined in mathematical terms.
the division of U.S businesses into the categories on proprietorship, partnerships, and corporations is based on what?
Define back-to-back loan. A back-to-back loan involves two parties only. One MNC borrows and re-lends directly to another.
18,76,764
1938722 Asked
3,689
Active Tutors
1460704
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!