Illustrates an example of complete market with volatility
Illustrates an example of complete market with volatility?
Expert
Take volatility as an illustration. As long as we contain a lognormal equity random walk, continuous hedging, no transaction costs and perfectly divisible assets and constant volatility after that we have a complete market. If such volatility is a known time-dependent function after that the market is yet complete. This is even still complete when the volatility is an identified function of stock price and time. But immediately that volatility becomes random after that the market is no longer complete. It is because now there are more states of the world than there are linearly independent securities. Actually, we don’t know what volatility will be in the future therefore markets are incomplete.
In order for a derivatives market to function two kind of economic agents are required: hedgers & speculators. Describe.Two kinds of market participants are essential for the operation of a derivatives market: speculators & hedgers.
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
the criteria for a good international financial or monetary system
Explain in brief about financial ratio?
When is an exploitable opportunity usually seen for excess returns?
Explain the dissimilarities in a cash budget and pro forma financial statements? Why pro forma financial statements are not utilized to forecast cash requirements.
What are the benefits of “paying late” and how do companies try to do this?
Normal 0 false false
Explain an example of Brownian motion, where it is used.
Explain the modern methodology for calculating tail risk by using Extreme Value Theory.
18,76,764
1935027 Asked
3,689
Active Tutors
1455548
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!