State the term Calibration in financial model
State the term Calibration in financial model?
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Calibration means selecting parameters in your model there the theoretical prices for exchange-traded contracts output by your model match closely, or as closely as possible, the market prices at an immediate in time. In a sense this is the opposite of fitting parameters to historical time series. When you match prices precisely then you are eliminating arbitrage opportunities, and it is why it is accepted.
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Foreign Exchange (FX): It is the exchange of one currency for other or the transformation of one currency into another currency. Foreign exchange too refers to the global market where currencies are traded virtually all around-the-clock. The word fore
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