All,Thank you for helping me understand this point more clearly; special thanks to"bearish" and "pcasters".Best,-P

<t>Hi,I'm wondering if someone can help clarify some confusion I have surrounding the use of physical and risk-neutralmeasures when computing the future exposure on an interest rate swap.Let's assume the correct approach is to simulate interest rate scenarios under the physical measure and thenprice...

Jennifer,The book by Clewlow and Strickland, "Implementing DerivativesModels", discusses implementing a binomialtree with time varying volatility.Paul

<t>I was wondering how one can implement discrete, proportionaldividends on a binomial tree if the dividend dates are noton the nodes of the tree. Specifically, the dividend rateis q; hence, the amount of the dividend at some time t isq*S(t), where S(t) is, say, the stock price. I am under theimpres...