Explain Decision features in finite-difference method
Explain the term Decision features in finite-difference methods.
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Decision features: In early exercises, chooser features and instalment premiums are all illustrations of embedded decisions saw in exotic contracts. Coping along with these numerically is rather straightforward using finite-difference methods, making such numerical techniques the natural ones for that contract. The dissimilarity between an American and a European option is about three lines of code in a finite-difference program and below a minute’s coding.
Describe Gresham’s Law.This law refers to the phenomenon that bad (abundant) money drives good (scarce) money out of circulation. This sort of phenomenon was frequently observed under the bimetallic standard under which gold and silver bot
Describe the advantages of investing by international mutual funds? The advantages of investing by international mutual funds comprise: (1) save transaction/information costs,
State the term GARCH.
Like an investor, what factors would you regard as before investing in the emerging stock market of a developing country? In emerging market stocks an investor needs to be concerned with the depth of the market and
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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
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Who introduced the model of discrete set of rates?
Explain deterministic model.
Explain risk in various forms.
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