--%>
Assignment Help - homework help

What are the characteristics of calibration

What are the characteristics of calibration?

E

Expert

Verified

Calibration is common inside all markets, but is typically more complicated than in the simple illustration above. Interest rate models may have dozens of parameters or still entire functions to be selected by matching along with the market.

Therefore Calibration can frequently be time consuming. Calibration is an illustration of an inverse problem, wherein we know the answer (the prices of easy contracts) and need to find the problem (all the parameters). Inverse problems are notoriously complicated, for illustration being very sensitive to initial conditions. It can be misleading, because it suggests that your prices are accurate.

   Related Questions in Financial Management

  • Q : Describe condition for

    Describe necessary condition for a fixed-for-floating interest rate swap to be possible?For fixed-for-floating interest rate swap to be possible it is essential for a quality spread differential to be present. Generally, the default-risk premiu

    		•
  • Q : International finance factor

    factor responsible for surging the international investment portfolio

    		•
  • Q : Determine value of put option with same

    Stock price is $98; and European call option struck at $100 along with an expiration of nine months has a value of $9.07. There nine-month, compounded continuously, interest rate is 4.5%. So find out the value of the put option with the same strike and expirat

    		•
  • Q : Illustrates an example of Value at Risk

    Illustrates an example of Value at Risk Used?

    		•
  • Q : Warning of David regarding lending to

    Normal 0 false false

    		•
  • Q : Why Does Risk-Neutral Valuation Work

    Why Does Risk-Neutral Valuation Work?

    		•
  • Q : An example of probabilities in a

    Illustrates an example of probabilities in a simple coin-tossing experiment.

    		•
  • Q : Foreign exchange transactions among

    How are foreign exchange transactions among international banks settled?The interbank market is network of correspondent banking relationships, along with large commercial banks maintaining demand deposit accounts along with one another, known a

    		•
  • Q : Explain the term PGARCH as of the

    Explain the term PGARCH as of the GARCH’s family.

    		•
  • Q : Basic operation of a currency forward

    Describe the basic operation of a currency forward market The forward market is an OTC market in which the forward contract for purchase or sale of foreign currency is tailor-made among the client and its international bank. No money changes ha

    		•