--%>

What is Static Hedging

What is Static Hedging?

E

Expert

Verified

Static hedging: There are rather a few problems with delta hedging, on the practical and the theoretical both side. In practice, hedging should be done at discrete times and is expensive. Sometimes one has to sell or buy a prohibitively huge number of the underlying in order to follow that theory. This is a problem along with barrier options and options with discontinuous payoff.

   Related Questions in Financial Management

  • Q : Explain the term CGARCH as of the

    Explain the term CGARCH as of the GARCH’s family.

  • Q : Define market for foreign exchange

    Define market for foreign exchange.Broadly described, the foreign exchange (FX) market encompasses the conversion of purchasing power from one currency to another, bank deposits of foreign currency, the extension of credit denominated in a forei

  • Q : Why does put-call parity not hold Why

    Why does put-call parity not hold, when option is American?

  • Q : European calls Explain the relationship

    Explain the relationship between the European calls, puts value with similar strike and expiration value.

  • Q : What will happen when a bank gives

    What will happen when a bank gives discount interest on a loan?

  • Q : Identical distributions required in

    Explain identical distributions required or not in the central limit theorem.

  • Q : Theory of comparative advantage and

    How does the theory of comparative advantage associate to the currency swap market?Name recognition is very important in the international bond market. Without it, even a creditworthy corporation will determine itself paying higher interest rat

  • Q : Fin 6000 A firm is evaluating two

    A firm is evaluating two mutually exclusive projects that have unequal lives. Evaluate the projects using the equivalent annual annuity approach (EAA), recommend which project they should select. The firm's cost of capital has been determined to be 18 percent, and the projects have the following i

  • Q : Example of traditional Value at Risk

    Illustrates an example of traditional Value at Risk by Artzner et al?

  • Q : Compute the cross-rates Calculate a

    Calculate a cross-rate matrix for the French franc, Japanese yen, German mark, and the British pound. Use the most current European term quotes to compute the cross-rates so that the triangular matrix result is alike to the portion above the diagonal .The cross-rate formul