Explain finite-difference method in finance
Explain finite-difference method in finance.
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Financial problems starting from stochastic differential equations as models for quantities developing randomly, like equity prices or interest rates, are using the language of calculus. We refer, in calculus to gradients, slopes, rates of change and sensitivities. Such mathematical ‘derivatives’ explain how fast a dependent variable, changes as one of the independent variables, as an option value, as an equity price and changes. These sensitivities are technically explained as the ratio of the infinitesimal change in the dependent variable to the infinitesimal change into the independent.
And we need an infinite number of such infinitesimals to explain an entire curve. Nonetheless, when trying to compute these slopes numerically, on a computer, for illustration, we cannot deal along with infinites and infinitesimals, and have to resort to estimates.
Explain the tool of Asymptotic analysis in Quantitative Finance.
In May 1995, Japan Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds while the exchange rate was 80 yen per dollar. The company liquidated the investment one year afterwards for $10,650,000. The exchange rate turned out 110 yen per dollar
In brief define each of the major types of international bond market instruments, noting their distinguishing characteristics.The major kind of international bond instruments & their distinguishing characteristics are as follows:
Are there some legal factors that might limit a corporation in its effort to pay cash dividends to common stockholders?
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Why is Vomma/Volga measures convexity?
Explain in brief about financial ratio?
Why do you think closed-end country funds frequently trade at a premium or discount?CECFs trade at premium or discount since capital markets of the home & host countries are segmented, preventing cross-border arbitrage. If cross-border arbit
How can the market decide the fair value of a bond?
What are the difference between Capital Asset Pricing Model and Markowitz’s Modern Portfolio Theory?
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