Explain static arbitrage and model-independent arbitrage
Illustrates a case of a static arbitrage and model-independent arbitrage?
Expert
We as set up a portfolio which gave us an immediate profit, and such portfolio did not have to be touched till expiration. It is a case of a static arbitrage. The other special feature of the above illustration is that this does not rely on any assumptions regarding how the stock price behaves. So the illustration is that of model-independent arbitrage.
Though, when deriving the famous option-pricing models we rely upon a dynamic strategy, termed as delta hedging, wherein a portfolio consisting of an option and stock is constantly adjusted through purchase or sale of stock in a very specific way.
In which measurement semi-variance mathematical definition of risk is used?
Explain another way of interpreting put–call parity.
Explain econometric models.
How is Utility Function Used?
When is the close relationship breaks-down in hedging reasons?
Explain the denotation a utility function and how it can vary between investors?
How will Marking to market put some rationality back in trading?
How are diversifiable risk and undiversifiable risk associated with portfolio?
What is GATT and what is its goal?
What is a Wiener Process/Brownian Motion?
18,76,764
1945910 Asked
3,689
Active Tutors
1433933
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!