Explain numerical integration in numerical method
Explain numerical integration in numerical method.
Expert
Infrequently one can write down the solution of an option-pricing problem within form of a numerous integral. It is as you can interpret the option value like an expectation of a payoff, and also an expectation of payoff is mathematically only the integral of the product of which payoff function and a probability density function. It is only possible in particular cases. The option has to be European, the underlying stochastic differential equation should be explicitly integrable (therefore the lognormal random walk is ideal for that) and the payoff shouldn’t generally be path dependent. So when this is possible then pricing is simple... you have a formula. The only complexity comes in turning this formula in a number. And which is the subject of numerical integration or quadrature.
Why is volatility annualized standard deviation of return?
Explain the common pattern of cash flows from a bond with a positive coupon rate.
Categorize the issues of Knight.
Unfocused Books is a discount retail bookshop that has three departments: fiction, non-fiction and children’s books. Sales and cost of sales for each department are shown below. In addition, each department has its own fixed costs for staffing and takes a one-third share of rental and management cos
If taxable income is 82,900 and filing single, what is tax liability?
What is Crash Metrics?
Explain the reasons of Quants to like, close form solution?
Security returns are found to be less correlated across countries than in a country. Why can it be?Security returns are less correlated possibly because countries are distinct from each other in terms of industry structure, macroeconomic policie
Illustrates the basic operation of a currency futures market.A futures contract is an exchange-traded instrument along with standardized features demonstrating contract size & delivery date. Futures contracts are marked-to-market day by day
Explain the difference between simple and complicated formula of value at risk.
18,76,764
1940865 Asked
3,689
Active Tutors
1419253
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!