Open Yale CoursesECON 251: Financial TheoryLecture 21 - Dynamic Hedging and Average Life<< previous session| next session >>Overview:This lecture reviews the intuition from the previous class, where the idea of dynamic hedging was introduced.We learn why the crucial idea of dynamic hedging is marking to market: even when there are millions ofpossible scenarios that could come to pass over time, by hedging a little bit each step of the way, the numberof possibilities becomes much more manageable. We conclude the discussion of hedging by introducing a
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This note was uploaded on 02/08/2012 for the course ECON 251 taught by Professor Geanakoplos,john during the Fall '09 term at Yale.