Does Empirical σ (Based on Past Realizations) Price Caps, flOors

question 8

Essay

Does empirical σ (based on past realizations) price caps, floors and swap- tions acurately? On average does it overprice or underprice these securi- ties?

---

Definitions:

Quantity of Labor

The total hours of labor supplied by workers or the number of workers employed in the production of goods and services at a given time.

Wage

A wage is the amount of money paid to an employee by an employer in exchange for work performed, typically expressed on an hourly, daily, or piecework basis.

Monopsonistic Cartel

A market condition where there is only one buyer for a product or service, giving them significant power over sellers.

Antitrust Laws

Rules and regulations prohibiting actions that restrain, or are likely to restrain, competition.