Quiz 1 Answers - 1) FatTailsarewhen: A) B) C) D)...

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Fat Tails are when: A) Variance is very high. B) Variance is very low. C) A small number of events explain a disproportionate amount of the variance. D) The variance can be explained by a large number of events. 2) Which is more robust when researching? A) Mean Absolute Deviation B) Standard Deviation 3) Select all that is true about Black-Scholes A) Bachelier first thought of it. B) It does not take any convexity into consideration. C) The volatility is stochastic. D) The volatility is a known constant. E) It is most robust when pricing a Bermudian option. 4) The First Law of Derivative Pricing is “Convexity always has a price”.  What is the Second  Law of Derivative Pricing? A) Convexity is always relatively cheap. B) Black-Scholes is wrong. C) The trick is to search for negative convexity. D)
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Quiz 1 Answers - 1) FatTailsarewhen: A) B) C) D)...

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