The volatility effect in an option-pricing
What are the ways to build-up the volatility effect in an option-pricing?
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There are several ways to build the volatility-smile effect in an option-pricing model, and even have no arbitrage. The most admired are, in order of complexity, given below: deterministic volatility surface, stochastic volatility and Jump diffusion.
What is meant through the terminology that an option is in-, at-, or out-of-the-money? A call (put) alternative with St > E (E > St) is referred to as trading in-the-money. If St Nor
What are Pros and cons of different methods? Answer: Table illustrate
What considerations might restrict the extent on which the theory of comparative advantage is realistic?Originally the theory of comparative advantage was advanced by the nineteenth century economist David Ricardo as an explanation for why natio
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Mr. James K. Silber, an avid international investor, sold a share of Rhone-Poulenc only, a French firm, for FF42. The share was bought for FF42 year ago. The exchange rate is FF6.15 per U.S. dollar and was FF6.65 per dollar a year ago. Mr. Silber acquired FF4
Illustrates that the put–call parity is a model-independent relationship.
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