Explain what is a Monte Carlo method
Explain what is a Monte Carlo method?
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This method simulates the random behaviour underlying the financial models. Therefore, in a sense they find right to the heart of the problem. Always keep in mind that, while pricing you should simulate the risk-neutral random walks, the value of a contract is then the ordinary present value of all cash flows.
Presently, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The interest rate of three month is equal to 8.0% per annum in the U.S. & 5.8% per annum in the U.K. One can borrow as much as $1,500,000 o
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From books of Aggarwal Bors, following information has been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax
What is a Utility Function?
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