What is a Poisson Process
What is a Poisson Process?
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It is a model for a discontinuous random variable. Time is continuous, other than the variable is discrete.
Explain in brief the difference between financial risk and business risk?
Illustrates an example of binomial model as complete market?
Assume that the pound is pegged to gold at 6 pounds per ounce, while the franc is pegged to gold at 12 francs per ounce. Of course it implies that the equilibrium exchange rate ought be two francs per pound. If the current market exchange rate is 2.2 francs pe
Explain various explanations regarding risk-neutral pricing.
One can state that the Bretton Woods system was programmed to an eventual demise. Remark on this proposition.The answer to this question is associated to the Triffin paradox. Under gold-exchange system, the reserve-currency country must run BOP
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What is stable Levy Distribution?
Illustrates an example of Option Adjusted Spread. Answer: Analyses by using Option Adjusted Spreads are common within Mortgage-Backed Securities (MBS).
Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax 40% Firm is proposing to buy the new plant that could generate extra annual profit of Rs. 10,000. The fixed cost of new plant is expected to Rs. 4000. New plant would increase sales volume by Rs. 40,00
How is quantity of model risk dependency on vega hedge?
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