--%>

What are the Forward and Backward Equations

What are the Forward and Backward Equations?

E

Expert

Verified

Forward and backward equations generally refer to differential equations for a stochastic process governing the transition probability density function. Forward and backward are diffusion equations and should hence be solved in the suitable direction in time, therefore the names.

   Related Questions in Financial Management

  • Q : Why we measure a projects risk Explain

    Explain why we measure a project’s risk as the change in the CV.

  • Q : Explain possible ways of marking

    Explain all possible ways of marking over-the-counter contracts.

  • Q : Describe the long position in an

    Describe the long position in an options contract?An option is a contract giving the long the right to buy or sell a given quantity of an asset at a particular price at some time in the future, however not enforcing any obligation on him if the

  • Q : Explain the programme of study of Monte

    Explain the programme of study of Monte Carlo method.

  • Q : Explain static arbitrage and

    Illustrates a case of a static arbitrage and model-independent arbitrage?

  • Q : Question on investment to maximize the

    Assume that the treasurer of IBM contains an extra cash reserve of $1,000,000 to invest for six months. The six-month interest rate is 8% per annum in the U.S. and 6% per annum in Germany. Now, the spot exchange rate is DM1.60 per dollar and the six-month forw

  • Q : Current income and common stockholders

    What is the meaning of statement: earnings available to common stock dividends paid from the current income and common stockholders statement affect the balance sheet item retained earnings.

  • Q : Determine normal distribution with mean

    How are normal distributions with mean and standard deviation in a given period shown?

  • Q : Question on interest pay through

    Grecian Tile Manufacturing of Athens, Georgia borrows $1,500,000 at LIBOR and a lending margin of 1.25 percent per annum on six-month rollover basis through London bank.  If six-month LIBOR is 4 ½ percent in the first six-month interval and 5 3/8 percent over the second six-mo

  • Q : How is quantity of model risk

    How is quantity of model risk dependency on vega hedge?