Explain volatility associated to the standard deviation
How is volatility associated to the standard deviation of the underlying’ return?
Expert
The real rate at which the underlying grows on average doesn’t influence the value. Certainly, the volatility, associated to the standard deviation of the underlying’s return, does issue. During practice, it’s generally much, much harder to estimate such average growth than the volatility; therefore we are rather spoiled in derivatives which we only require to estimate the relatively stable parameter, volatility2.
The purpose that this is true is that by hedging an option with the underlying we remove any exposure to the direction of the stock, whether this goes up or down ceases to matter. Through eliminating risk in this way we also remove any dependence upon the value of risk. End result is that we may as well see we are in a world wherein no one values risk at all, and all trade-able assets grow at the risk-free rate upon average.
What are a callable bond and a putable bond? How can each of these bonds affect their market interest rates?
Explain the Simulations tool in Quantitative Finance.
What is forward equation?
What are the ways to make the financial trades on an organized exchange?
Explain the term Serial Autocorrelation.
Remark on the following statement: "As the U.S. imports more than it exports, it is essential for the U.S. to import capital from foreign countries to finance its present account deficits."The statement presupposes that the U.S. present account
State the term dispersion trading?
When we can use Finite difference numerical method?
what happens to company when additional fund is not required?
In financial theory how financial data satisfied?
18,76,764
1955814 Asked
3,689
Active Tutors
1417499
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!