--%>
Assignment Help - homework help

Probabilistic modelling approach in Quantitative Finance

Explain the Probabilistic modelling approach in Quantitative Finance.

E

Expert

Verified

Probabilistic: One of the main assumptions about the financial markets, at least so far as quantitative finance goes; those asset prices are random. We tend to think of explaining financial variables as following several random paths, along with parameters explaining the growth of the asset and degree of asset of randomness.

We efficiently model the asset path via a given rate of growth, on average and its deviation from such average. It approach to modelling has had the greatest influence over the last 30 years, leading to the explosive development of the derivatives markets.

   Related Questions in Financial Management

  • Q : Closed-end country funds trade at

    Why do you think closed-end country funds frequently trade at a premium or discount?CECFs trade at premium or discount since capital markets of the home & host countries are segmented, preventing cross-border arbitrage. If cross-border arbit

    		•
  • Q : Example of restrictive covenants given

    Give an example of restrictive covenants that could be given in a bond’s indenture?

    		•
  • Q : Matching loan and deposit maturities

    Good fellow national bank decided to compete with a savings and loan by offering 30 year fixed rate mortgage loans at 8% annual interest. It plans to obtain the money got the loans by selling one year 6% CD to it's depositors. During first year of operation, good fellows sold it's depositors 1,000,0

    		•
  • Q : Major types of international bond

    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:

    		•
  • Q : United State account deficits Remark on

    Remark on the following statement: "As the U.S. imports more than it exports, it is essential for the U.S. to import capital from foreign countries to finance its present account deficits."The statement presupposes that the U.S. present account

    		•
  • Q : Question on Fiat trades and ADR At

    At Milan bourse, Fiat stock closed at EUR31.90 per share on Friday, September 10, 1999. Fiat trades as & ADR on the NYSE. One underlying Fiat shares equivalent one ADR. On September 10, the $/EUR spot exchange rate was $1.0367/EUR1.00. At this exchange

    		•
  • Q : How model risk of Delta hedging is

    Explain how is exposed model risk of Delta hedging is reduced by static hedging.

    		•
  • Q : How is GARCH determined How is GARCH

    How is GARCH determined?

    		•
  • Q : What is Knight in finance theory What

    What is Knight in finance theory?

    		•
  • Q : How is arbitrage argument estimated How

    How is arbitrage argument estimated?

    		•