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Which of the following statements are TRUE with respect to the pricing kernel methodology? a. This method is foolproof b. This method requires that mispricing,
Which of the following statements are TRUE with respect to the pricing kernel methodology? a. This method is foolproof b. This method requires that mispricing, if it exists, is consistent across securities c. This method does not require much computation to use in practice d. This method might result in two, or more, valuations for the same security if many different option prices are available e. This method can use observed option prices to model prices of exotic options that do not trade regularly f. To be effective, this method requires that the pricing kernel not change too much from the estimation data to the application
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