Synthetic replication
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Synthetic replication is the process by which a financial asset's payoff is exactly replicated by trading other securities.[1]
For instance Black Scholes theory claims vanilla option pricing can be achieved through the use of stock and zero-coupon bond.
References
- ^ T. Daniel Coggin, Frank J. Fabozzi (1998). Applied Equity Valuation. John Wiley and Sons. ISBN 1-883249-51-1.
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