--%>
Assignment Help - homework help

How is hedging optimized when transaction costs are there

How is hedging optimized when transaction costs are there?

E

Expert

Verified

In practice, people would not rehedge at fixed intervals, except perhaps only before market close. There are several other possible strategies involving hedging while the underlying or delta moves a given amount, or even strategies including utility theory. Again, the mathematics is typically not easy, and is certainly more for any argument!

   Related Questions in Financial Management

  • Q : How is arbitrage argument estimated How

    How is arbitrage argument estimated?

    		•
  • Q : Assessing payment method Whereas you

    Whereas you were visiting London, you purchased a Jaguar for £35,000, payable in three months. You have sufficient cash at your bank in New York City that pays 0.35% interest per month, compounding monthly, to pay for the car. At present, the spot exchan

    		•
  • Q : Question on optimal weights Assume you

    Assume you are interested in investing in the stock markets of 7 countries that means France, Canada, Japan, Germany, Switzerland, the United Kingdom, and the United States. Particularly, you would like to solve out for the optimal (tangency) portfolio compris

    		•
  • Q : Determine the efficiency of Monte Carlo

    Determine the efficiency of Monte Carlo method.

    		•
  • Q : Illustrates example of bid/offer on

    Illustrates an example of bid/offer on a call in put–call parity?

    		•
  • Q : Explain merits and demerits of Mr

    Mr. Ross Perot, a former Presidential candidate of the Reform Party, that is a third political party in the United States, had objected strongly to the creation of the North American Trade Agreement (NAFTA), that nonetheless was inaugurated in the year of 1994

    		•
  • Q : Example of Margin Hedging in

    Explain an example of Margin Hedging in Metallgesellschaft and Long Term Capital Management.

    		•
  • Q : Describe a full definition of arbitrage

    Describe a full definition of arbitrage. Arbitrage can be described as the act of simultaneously buying & selling the similar or equivalent assets or commodities for the reason of making certain, guaranteed pro

    		•
  • Q : Calculate rate of return on investment

    In May 1995, Japan Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds while the exchange rate was 80 yen per dollar. The company liquidated the investment one year afterwards for $10,650,000. The exchange rate turned out 110 yen per dollar

    		•
  • Q : Define pricing of options to simulation

    Who gave the pricing of options to the simulation of random asset paths?

    		•