The tool of Approximations methods in Quantitative Finance
Explain the tool of Approximations methods in Quantitative Finance.
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Approximations: In modelling we intend to come up with a solution representing something useful and meaningful, as an option price. But for the model is really simple, we may not be capable to solve it simply. It is where approximations come in. A complex model may have approximate solutions. These approximate solutions might be good adequate for our purposes.
Define the term correct delta with an example?
Explain linear or non-linear in Monte Carlo method.
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What are the important observations about hedging error?
Illustrates an example to explain normal distribution of random numbers?
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Illustrates the formula of Rho for the foreign exchange option value?
Explain an example of finite-difference method.
When we can use Finite difference numerical method?
Explain in brief the accumulated depreciation?
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