Explain normal distribution model proposed by L.Bachelier
Explain normal distribution model proposed by Louis Bachelier.
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He proposed a model as a simple normal distribution, for equity prices and built on this a model for pricing the almost unheard of alternatives. His model consists of many of the seeds for later work, although lay ‘dormant’ for many, many years.
Define one feature of co-integration for dynamic relationship?
Explain the term FIGARCH as of the GARCH’s family.
The discussion of zero-coupon bonds in the text gave an instance of two zero-coupon bonds issued through Commerzbank. The DM300, 000,000 issues due in the year of 1995 sold at 50 percent of face value and the DM300, 000,000 due in the year of 2000 sold a
Elaborate: The increased common stock cash dividend can send a signal to the common stockholders.
Explain how is exposed model risk of Delta hedging is reduced by static hedging.
When is an exploitable opportunity usually seen for excess returns?
Describe how exchange rate fluctuations influence the return from a foreign market measured in dollar terms. Describe the empirical evidence on the effect of exchange rate uncertainty on the risk of foreign investment.Mostly exchange rate fluctu
What is dynamically hedge?
9. Define: a) Conversion ratio b) Conversion value c) Straight bond value in relation to a convertible bond.
Give an example of dynamic hedging.
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