Introduction
1) Continuous Dilemma
a) Transition Cost( If we want to hedge at high frequency to mimic the continuous/theoretical method, we have to face it )
b) Variance of return in hand (different time, different situation)
2)Risk Management
1) Financial risk inherent to nonfinnancial business
2) Market risk incurred by the provider of finanical instrument
Micromanagement/Macromanagement for hedging
Residual Risks(Legal risks, Fraud risks, Credit risks....)
3) Gap between trader and quant
a) Explain the main conclusion in a single sentence before discuss the subject matter
b) Explain the subject matter in a single sentence
c) Reject the whole project if unable to perform the above two steps.
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