Write TRUE if the statement is true and FALSE if it is not. 1. Volatility of the financial markets can be measured using the historical prices of an investment while payoff values in the Monte Carlo Simulation are summed then discounted in today's value. 2. Risk free rate can be derived from a triple A rated commercial bonds and the estimated price of options is dependent on the expected return of an investor. 3. Black Scholes Model is a continuous time model. This model emphasizes the uncertainty of values of an investment.
Write TRUE if the statement is true and FALSE if it is not.
1. Volatility of the financial markets can be measured using the historical prices of an investment while payoff values in the Monte Carlo Simulation are summed then discounted in today's value.
2. Risk free rate can be derived from a triple A rated commercial bonds and the estimated
3. Black Scholes Model is a continuous time model. This model emphasizes the uncertainty of values of an investment.
4. Monte Carlo methods is more advantageous with more uncertainties of data in the financial market. It can also be used for generating draws from a probability distribution.
5. If there's an expected down move of an investment, the difference should be multiplied with the probability and deducted from the overall up move, then, discounted back to get the price of options using the binomial model.
6. Quantitative finance helps to allocate resources to provide the optimum returns.
7. Financial models are accurate
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