What is super hedging
What is super hedging?
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Super hedging: In unfinished markets you cannot reduce all risk by classical dynamic delta hedging. But on occasion you can superhedge, it means that you construct a portfolio which has a positive payoff whatever occurs to the market.
Illustrates an example of GARCH.
Remark on the following statement: "As the U.S. imports more than it exports, it is essential for the U.S. to import capital from foreign countries to finance its present account deficits."The statement presupposes that the U.S. present account
A bank sells a $3,000,000 FRA for a three-month period beginning three months from today and ending six months from today. The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a three-month Eurodollar loan and having accepted a six-month Eurodol
What is an option price?
You are trying to save to buy a new $150,000 Ferrari. You have $40,000 today that can be invested at your bank. The bank pays 5.5% annual interest rate on its accounts. How long will it be before you have enough to buy the car?
Illustrates an example of jump-diffusion model?
Criticize the flexible exchange rate regime from the point of view of the proponents of the fixed exchange rate regime. If exchange rates are randomly fluctuating, that may discourage international trade and suppor
Hebner Housing Corporation consist of forecast the given numbers for the upcoming year as follows: • Net income = 180,000. • Sales = $1,000,000. &b
What are a callable bond and a putable bond? How can each of these bonds affect their market interest rates?
What are the benefits of “paying late” and how do companies try to do this?
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