Hi David,
Why would that be wrong? Minimizing CF×Settlement-quoted price should be equivalent to maximizing quote price divided by CF right? (As settlement price is like a constant and we divide the whole equation by cf...
One other question which really bugs me about Information Criteria. One option was BIC is asymptotically efficient and one answer options was MSE is biased if i remember correct. I put MSE is biased, because from what i know BIC is asymptotically consistent, not efficient..thats also what i...
Regarding 5, i think i didnt have that answer option ( more steps lead to convergence). I think i chose an answer saying the volatility in the binomial is constant in each time step..anyone remember? (Blue Book)
Why should a future Index have a risk neutral prob of one ? The risk neutral Probability is a change in the Probability measure such that you can discount the expected option value with the risk free rate and is derived from the up and down factor..
You either subtract the PV of the dividends from the Stock or you calculate the corresponding dividend yield q and discount the Stock with that before multiplying with N(d1)
This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.