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1. Explainhowadynamicdeltahedgingstrategyworks,andwhythenetprofit/lossisclosetobutnotexactlyequaltozero.(Limit150words)(1Mark) 2. Explainthedifference,intermsofvolatilityforecasting,betweenusingaGARCH(1,1)modelandusingthesamplestandarddeviation.(Limit150words)(1Mark) 3. Howdoesusingacopulahelpwithmodellingthecorrelationbetweendefaults?(Limit150words)(1Mark)

1. Explainhowadynamicdeltahedgingstrategyworks,andwhythenetprofit/lossisclosetobutnotexactlyequaltozero.(Limit150words)(1Mark)

2. Explainthedifference,intermsofvolatilityforecasting,betweenusingaGARCH(1,1)modelandusingthesamplestandarddeviation.(Limit150words)(1Mark)

3. Howdoesusingacopulahelpwithmodellingthecorrelationbetweendefaults?(Limit150words)(1Mark)

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