What happens if the trader is wrong? The actual path followed by stock prices may not follow…

What happens if the trader is wrong? The actual path followed by stock prices may not follow geometric Brownian motion at all, or it may follow geometric Brownian motion but with a different volatility. Introduce a new interface StockPriceModel which can be used to generate stock prices in the P measure. You should ensure that BlackScholesModel implements the interface. Provide an alternative implementation of StockPriceModel called TwoLevelModel that is similar to the Black–Scholes model except that the volatility sigma takes two different values. Up to time T /2 the volatility should be

»What happens if the trader is wrong? The actual path followed by stock prices may not follow geometric Brownian motion at all, or it may follow geometric Brownian motion but with a different volatility. Introduce a new interface StockPriceModel which can be used to generate stock prices in the P measure. You should ensure that BlackScholesModel implements the interface. Provide an alternative implementation of StockPriceModel called TwoLevelModel that is similar to the Black–Scholes model except that the volatility sigma takes two different values. Up to time T /2 the volatility should be equal to some value s1. and at subsequent times it should equal s2. How would you change HedgingSimulator so that it can cope with different models?

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