Problems with real probabilities to price derivatives
What are the main problems with real probabilities to price derivatives?
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Two main problems are there with it.1. You need to be capable to measure real probabilities. 2. You need to decide on a measure of risk aversion or a utility function.
Describe the three major trends which have prevailed in international business at the time the last two decades.The 1980s brought a quick integration of international capital & financial markets. Impetus for globalized financial markets prim
Suppose today's settlement price on a CME DM futures contract is $0.6080/DM. You have a short position in one contract. Your margin account presently has a balance of $1,700. The next three days' settlement prices are $0.6066, $0.6073, & $0.5989. Compu
Mr. James K. Silber, an avid international investor, sold a share of Rhone-Poulenc only, a French firm, for FF42. The share was bought for FF42 year ago. The exchange rate is FF6.15 per U.S. dollar and was FF6.65 per dollar a year ago. Mr. Silber acquired FF4
When we can use Monte Carlo numerical method?
A firm is evaluating two mutually exclusive projects that have unequal lives. Evaluate the projects using the equivalent annual annuity approach (EAA), recommend which project they should select. The firm's cost of capital has been determined to be 18 percent, and the projects have the following i
Explain different forms of market efficiency.
What is a Poisson Process?
Who illustrated short-term interest rate through a stochastic differential equation?
Explain the field of quantitative finance in disrepute for biggest financial collapse in all decades.
What are the ratios that a potential long-term bond investor would be most interested in?
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