Explain standard model is the lognormal model
For equities the standard model is the lognormal model, if there are many more ‘standard’ models within fixed income. Does it matter?
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No, not when you are solving the equations numerically, only when you are trying to get a closed-form solution wherein case the simpler the coefficients the more probable you are to get a closed-form solution.
State the term Option Adjusted Spread? Answer: The OAS stands for Option Adjusted Spread is the constant spread added to a forward or a yield curve to match the mark
At Milan bourse, Fiat stock closed at EUR31.90 per share on Friday, September 10, 1999. Fiat trades as & ADR on the NYSE. One underlying Fiat shares equivalent one ADR. On September 10, the $/EUR spot exchange rate was $1.0367/EUR1.00. At this exchange
Explain in brief the depreciation expense as it comes on the income statement. How can depreciation affect the flow of cash?
Explain the Simulations tool in Quantitative Finance.
Great Corporation has the following capital situation. Debt: One thousand bonds were issued five years ago at a coupon rate of 11%. They had 20-year terms and $1,000 face values. They are now selling to yield 9%. The tax rate is 37% Preferred stock: Two thousand shares of preferred are outstanding,
You need to price a fixed-income contract by using the BGM model. Which numerical method should you use?
Explain relationship between advanced probability theory and option prices theory.
How is Information Ratio calculated?
What are random factors for risk-neutral drifts?
Describe how the potential liability of owners of proprietorships, corporations and partnerships is different.
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