Who explain short-term interest rate by a stochasti
Who illustrated short-term interest rate through a stochastic differential equation?
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Oldrich Vasicek illustrated the short-term interest rate through a stochastic differential equation of the form:
dr = µ(r, t) dt + σ(r, t) dX.
The bond pricing equation is a parabolic partial differential equation, same to the Black–Scholes equation.
Explain how is exposed model risk of Delta hedging is reduced by static hedging.
You need to price a fixed-income contract by using the BGM model. Which numerical method should you use?
How can financial managers estimate the average tax rate?
Discuss risk from the perspective of the CAPM (Capital Asset Pricing Model).
venture capital valuation method a venture capitalist wants to estimate the value of a new venture. the venture is not expected to produce net income or earnings until the end of year 5 when the net income is estimated at 1,600,000.00. A publicly traded competitor or comparable firm has current ea
Discuss the fundamental motivations for a counterparty to enter in a currency swap. One fundamental reason for a counterparty to enter in a currency swap is to exploit the comparative benefit of the other in gaining debt financing at a lower int
Show how Kareem's WACC would change if the tax rate dropped to 25 percent and the estimated cost of equity capital were based on a risk-free rate of 7 percent, a market risk premium of 8 percent, and a systematic risk measure or beta of 2.0.
What is Vega Hedging?
How was Markowitz show that one would invest in the first stock or may be sold the second stock?
What is Colour for option value?
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