What is volatility in finance
What is volatility in finance?
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Here volatility is uncertain, is permitted to lie within a given range, but the probability of volatility having any value is not specified. Instead of working along with probabilities we here work with worst-case scenarios. Therefore uncertainty is more related with the idea of stress-testing portfolios.
Your firm have just issued five year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4%. Describe the amount of first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is at present 7.2%?Solution:
Explain the term REGARCH as of the GARCH’s family. Answer: REGARCH: It is a Range-based Exponential GARCH. It models the low to high ran
You need to price a European, non-path-dependent contract upon a basket of equities. Which numerical method should you use?
What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing?
What is the Finite-Difference Method?
What are the ratios that a potential long-term bond investor would be most interested in?
How is Sharpe ratio calculated?
Which is associated to Sharpe Ratio?
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The discussion of zero-coupon bonds in the text gave an instance of two zero-coupon bonds issued through Commerzbank. The DM300, 000,000 issues due in the year of 1995 sold at 50 percent of face value and the DM300, 000,000 due in the year of 2000 sold a
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