Hedging Fixed Indexed Annuities : describe the distribution of replicating errors.Make a plot of this distribution.
Hedging Fixed Indexed Annuities.1. Simulate an arbitrary number of Geometric Brownian Motion pathways. You’llprobably want to simulate at least 1,000 paths. Each path depends on a set of random numbers, a constant volatility and default-free rates. This is a simulation for theunderlying stock index, S(t) up until a terminal time T. (No dividend yield.) 2. … Read more