We know in the literature that in a market extended to contain swap contracts whose payoffs depend on the realized higher moments of the state variable process, a perfect hedge can be achieved. Are there any other conditions that lead to a perfect hedge in a market characterized by random jumps and stochastic volatility?
Dear Ako Doffou
Greetings,
Please find the attached file very related for your topic,
Best Regards
Dear Prof. Doffou,
If you are willing to go even more into technical and technological details then I would like to draw your attention to my published research on the String Theory of Stock Market systems listed on my RG page and you will see that under discontinuos stochastic volatility of the environment from which the fundamentals of asset pricing and management and engineering potentials are drawn some additional physical structural engineering is required to the stock market system which includes laws on no arbitrage, short and medium range planning and managerial coordination of individual plans so as to engineer a econophysically consistent asset pricing system. But once that has been constructed as i have shown with experiments over various levels of aggregation that the system can achieve rational expectations Arrow-Debreu equilibrium in genetic meanfield systems. The system can be shown to be conserving Matter and Energy fairly efficiently in a dynamic equilibrium sense. It is efficient in all senses. Earl Prof. (University Institute Chair) Dr. (D. Phil.) SKM QC EPS Fellow (Indirect) MES MRES MAICTE
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