Explain the second way of calibration
Explain the second way of calibration if we can’t measure that parameter.
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Another method is to assume, efficiently, that there is information in the market prices of traded instruments. Here in example we ask what volatility we should put in a formula to find the ‘correct’ price of $19. We then utilize that number to price other instruments. There In that case we have calibrated our model to an instantaneous snapshot of the market on one moment in time, quite than to any information by the past.
Great Corporation has the following capital situation. Debt: One thousand bonds were issued five years ago at a coupon rate of 11%. They had 20-year terms and $1,000 face values. They are now selling to yield 9%. The tax rate is 37% Preferred stock: Two thousand shares of preferred are outstanding
Describe the concept of the Sharpe performance measure.The Sharpe performance measure (SHP) is a risk-adjusted performance measure. This is describing as the mean excess return to portfolio above the risk-free rate divided by the portfolio's sta
Describe difference between the retail or client market and the wholesale or interbank market for foreign exchange?The market for foreign exchange can be distinguished as two-tier market. One tier is the wholesale or interbank market and the ot
Financing costs included into the capital budgeting analysis process. Explain.
Explain number of dimensions in Monte Carlo method.
Explain stochastic volatility.
What is GATT and what is its goal?
How is hedging optimized when transaction costs are there?
What are the advantages of “collecting early” and how do companies try to do this?
How must you hedge discretely?
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