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.
How is absolute risk aversion function defined?
Explain the term PGARCH as of the GARCH’s family.
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