Give an example of closed form solution
Give an example of closed form solution?
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The Black–Scholes formula is easy and closed form and frequently used in spite of people knowing that they have restrictions, and despite being utilized for products for that they were not initially intended.
Briefly explain the operating leverage effect and the reason for it to occur? What are the advantages and limitations of high operating leverage?
You need to price a fixed-income contract by using the BGM model. Which numerical method should you use?
What is Vomma or Volga in option value?
Researchers found that this is very hard to forecast the future exchange rates more precisely than the forward exchange rate or the current spot exchange rate. How would you interpret this?This implies that exchange markets are informationally e
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
What are the advantages of “collecting early” and how do companies try to do this?
Explain the term utility function and uses.
Explain the term REGARCH as of the GARCH’s family. Answer: REGARCH: It is a Range-based Exponential GARCH. It models the low to high ran
Elaborate: Accounts receivable are sometimes not collected. What is the reason that companies extend trade credit when they could insist on cash for all sales?
What are the modern approaches uses for forecast volatility and model?
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