Explain the result of volatility structure
Explain the result of volatility structure.
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The resulting volatility structure that never matches actual volatility, and even though exotics are priced consistently this is not clear how to best hedge exotics with vanillas so as to minimize any model error. These concerns seem to carry little weight, because the method is so ubiquitous. As so frequently happens in finance, once a technique becomes popular this is hard to go against the majority. There should be job safety in numbers.
The part of the net income which is not distributed to shareholders goes to reserves (to shareholders’ equity). As dividends shows real money, reserves are real money as well. Is it true?
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Define the term Vanilla Bonds regarding Corporate Bonds?
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