Explain the second way of calibration
Explain the second way of calibration if we can’t measure that parameter.
Expert
Another method is to assume, efficiently, that there is information in the market prices of traded instruments. Here in example we ask what volatility we should put in a formula to find the ‘correct’ price of $19. We then utilize that number to price other instruments. There In that case we have calibrated our model to an instantaneous snapshot of the market on one moment in time, quite than to any information by the past.
If the cost benefit of interest rate swaps would probably be arbitraged away in competitive markets, what other explanations present to explain the rapid development of the interest rate swap market?All kinds of debt instruments are not always o
A stock whose value is now $44.75 is growing on average by 15 percent per annum. Its volatility is 22 percent. The interest rate is 4 percent. You need to value a call option along with a strike of $45, expiring in two months’ time. So, what can you do?
Is it possible for a company with a positive net income and which does not distribute dividends to find itself in suspension of payments?
Explain how a country can run net balance of payments deficit or surplus.A country can run net BOP deficit or surplus by engaging in the official reserve transactions. For instance, an overall BOP deficit can be supported through drawing down th
Explain the cash budget and the capital budget relation to pro forma financial statements.
What is Crash (Platinum) hedging?
What are the typical types of Efficient Markets Hypothesis? Explain.
How are short or future option margins to be paid at credit risk?
The risk-averse investor will pay off for risk when he will take on an investment project. Explain
Explain Capital Asset Pricing Model returns on individual assets and Arbitrage Pricing Theory returns on investments.
18,76,764
1946860 Asked
3,689
Active Tutors
1458856
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!