--%>
Assignment Help - homework help

Explain the result of volatility structure

Explain the result of volatility structure.

E

Expert

Verified

The resulting volatility structure that never matches actual volatility, and even though exotics are priced consistently this is not clear how to best hedge exotics with vanillas so as to minimize any model error. These concerns seem to carry little weight, because the method is so ubiquitous. As so frequently happens in finance, once a technique becomes popular this is hard to go against the majority. There should be job safety in numbers.

   Related Questions in Corporate Finance

  • Q : Problem on leveraged beta AB

    AB Restaurants has debt/equity ratio .25, and its leveraged beta is 1.5. Its tax rate is 30%, and its cost of equity is 15%. The risk-free rate is 5%. CD Restaurants has debt/equity ratio .4, and tax rate 35%. Find the cost of equity for CD.

    		•
  • Q : Problem on Decision variables A factory

    A factory has three distinct systems for making similar product: System 1: Worker runs 3 machines of type-A, each of which costs $20 per day to run, each generates 100 units per day and the worker is paid $40 per day.System 2

    		•
  • Q : Problem on Bank branch networks While

    While banks across the United States and Europe are cutting down their number of branches, the number of bank branches in Hong Kong has increased in the same period. Hong Kong Monetary Authority statistics show the number of bank branches in Hong Kong at the end of 20

    		•
  • Q : Commercial bank problems For an

    For an enhanced understanding of banking industry, it is significant to look at the atmosphere in which commercial banks operate. Production growth and globalization are two main forces reshaping the banking industry nowadays. The following two questions are associate

    		•
  • Q : Define Credit and Collections Credit &

    Credit & Collections: Usually, credit is stated as the procedure of providing a loan, in which one party transfers wealth to the other with the expectation that it will be re-paid in full plus interest. The definition of collections is connected t

    		•
  • Q : Low-discrepancy sequence or quasi

    Who proposed definition and development of low-discrepancy sequence theory or quasi random number theory?

    		•
  • Q : Who described option pricing with

    Who described option pricing with deterministic volatility?

    		•
  • Q : Explain deducing yield curve model

    Explain deducing yield curve model of HJM.

    		•
  • Q : How could we project exchange rates How

    How could we project exchange rates within order to be capable to forecast exchange differences?

    		•
  • Q : MIRR & IRR Projects Answer using

    Answer using Microsoft Word and your answer should be between 100 and 150 words Question1. Identify the major

    		•