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jump process

A jump process refers to pricing motivations underlying catastrophe (cat) bonds.

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jump process

A jump process refers to pricing motivations underlying catastrophe (cat) bonds.

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Instead of a gradual supply of information slowly affecting a high-yield bond's pricing (Brownian motion), cat bond pricing is subject to large, sudden jumps, such as the appearance of a pending hurricane bearing down on property covered by the bond's reinsurance.