• Study Resource
  • Explore Categories
    • Arts & Humanities
    • Business
    • Engineering & Technology
    • Foreign Language
    • History
    • Math
    • Science
    • Social Science

    Top subcategories

    • Advanced Math
    • Algebra
    • Basic Math
    • Calculus
    • Geometry
    • Linear Algebra
    • Pre-Algebra
    • Pre-Calculus
    • Statistics And Probability
    • Trigonometry
    • other →

    Top subcategories

    • Astronomy
    • Astrophysics
    • Biology
    • Chemistry
    • Earth Science
    • Environmental Science
    • Health Science
    • Physics
    • other →

    Top subcategories

    • Anthropology
    • Law
    • Political Science
    • Psychology
    • Sociology
    • other →

    Top subcategories

    • Accounting
    • Economics
    • Finance
    • Management
    • other →

    Top subcategories

    • Aerospace Engineering
    • Bioengineering
    • Chemical Engineering
    • Civil Engineering
    • Computer Science
    • Electrical Engineering
    • Industrial Engineering
    • Mechanical Engineering
    • Web Design
    • other →

    Top subcategories

    • Architecture
    • Communications
    • English
    • Gender Studies
    • Music
    • Performing Arts
    • Philosophy
    • Religious Studies
    • Writing
    • other →

    Top subcategories

    • Ancient History
    • European History
    • US History
    • World History
    • other →

    Top subcategories

    • Croatian
    • Czech
    • Finnish
    • Greek
    • Hindi
    • Japanese
    • Korean
    • Persian
    • Swedish
    • Turkish
    • other →
 
Profile Documents Logout
Upload
FORM 8-K - corporate
FORM 8-K - corporate

... non-employee directors from share-based grants to dollar-based grants. Prior to the Amendment, non-employee directors were entitled to receive equity grants under the Plan as follows: (i) upon joining the Board, an award of 2,000 shares of restricted stock and an option to purchase 12,000 shares of ...
Algebra I Practice N.RN.B.3: Simplifying Radicals 2 NAME
Algebra I Practice N.RN.B.3: Simplifying Radicals 2 NAME

Introduction to Pricing and Hedging Continuous Time
Introduction to Pricing and Hedging Continuous Time

International Banking - Module A Part II
International Banking - Module A Part II

... Commodities futures Financial futures Currency futures Index futures ...
(Module A) – Part II
(Module A) – Part II

... Commodities futures Financial futures Currency futures Index futures ...
jointly hedging jump-to-default risk and mark-to
jointly hedging jump-to-default risk and mark-to

the valuation of equity derivatives
the valuation of equity derivatives

... would have benefited from being informed at the time of their creation by an established source of recognised valuation best practice. In the absence of this many consider that there are mismatches between the way in which the accounting fair value of an instrument has to be determined and the way i ...
Sensitivity, Hedging, and the "Greeks" (PDF)
Sensitivity, Hedging, and the "Greeks" (PDF)

CIS March 2011 Exam Diet
CIS March 2011 Exam Diet

... Consider a non-dividend paying stock with a spot price of N50. A 6-month European call with a strike price of N50 costs N4. A European put with the same expiration date and strike price costs N3.50. The continuously compounded risk-free rate is 4% per annum. The volatility of the stock is 25% per ye ...
Investments
Investments

butterfly spread
butterfly spread

... A forward contract with a nonzero premium must have a forward price which is “off the market (forward) price”. Thus, it is sometimes called an off-market forward. Unless the strike price equals the forward price, buying a call and selling a put creates an offmarket forward. ...
Lecture 21: Risk Neutral and Martingale Measure
Lecture 21: Risk Neutral and Martingale Measure

Volatility - U.S. Options
Volatility - U.S. Options

... » About as low as it’s been (in many stocks and indexes) for almost 30 years » Is not right or wrong, but does represent a current consensus » Is considered by some to be forward looking » Represents a lot more information than “just” price distribution ...
note on weighted average strike asian options
note on weighted average strike asian options

The Greek Letters
The Greek Letters

lecture_20_hedging_and_black-scholes
lecture_20_hedging_and_black-scholes

... risky asset, usually called the stock, and one riskless asset, usually called the money market, cash, or bond. Now we make assumptions on the assets: • (Riskless rate) The rate of return on the riskless asset is constant and thus called the risk-free interest rate. • (Random walk) The instantaneous ...
Algebra 1-9 April 2012 6 2 Exponential - Shope-Math
Algebra 1-9 April 2012 6 2 Exponential - Shope-Math

Vertical Intercept
Vertical Intercept

... graph. On the left side of the graph, the price is high and the quantity is low. In fact, the price of the  pizza is so high that almost no pizzas are sold. On the right side of the graph, the price is low and the  quantity sold is higher.  ...
Ch 7: 1.1-4
Ch 7: 1.1-4

... Futures contracts are traded on exchanges, have a price that changes as a result of trading until the settlement date, and are standardized in terms of the quantity of the underlying asset to be delivered and the settlement dates for the available contracts. Futures contracts lack the flexibility of ...
Journal Review: Mathematical Finance (Oct/July/April/Jan 2006
Journal Review: Mathematical Finance (Oct/July/April/Jan 2006

... We provide a computational study of the problem of optimally allocating wealth among multiple stocks and a bank account, to maximize the infinite horizon discounted utility of consumption. We consider the situation where the transfer of wealth from one asset to another involves transaction costs tha ...
Markov process
Markov process

... Earlier a was a function only of t.  The expected drift rate and variance rate of an Ito process are both liable to change over time. ...
Chapter 10
Chapter 10

...  The following applies to any financial asset: V = Current value of the asset Ct = Expected future cash flow in period (t) k = Investor’s required rate of return Note: When analyzing various assets (e.g., bonds, stocks), the formula below is simply modified to fit the particular kind of asset being ...
Schrodinger`s Equation and the Financial Markets
Schrodinger`s Equation and the Financial Markets

... With  the  derived  solutions,  the  tunneling  is  actualized,  when  interest  rate  is  constant,   the  wall  must  be  thin,  which  in  turn  leads  to  a  relatively  small  volatility.    Basically,  in  order  for   the  tunn ...
The Black-Scholes Equation with Variable
The Black-Scholes Equation with Variable

Hedging and rebalancing options in a binomial tree.
Hedging and rebalancing options in a binomial tree.

... time for a certain price while a put option gives the holder the right to sell the underlying asset at a certain time for a certain price (Hull, 2008, p.6). In fact, there are some basic terms that both the seller and the buyer must agree on in order to establish the contract: Strike price (the pric ...
< 1 ... 26 27 28 29 30 31 32 33 34 >

Black–Scholes model

The Black–Scholes /ˌblæk ˈʃoʊlz/ or Black–Scholes–Merton model is a mathematical model of a financial market containing derivative investment instruments. From the model, one can deduce the Black–Scholes formula, which gives a theoretical estimate of the price of European-style options. The formula led to a boom in options trading and legitimised scientifically the activities of the Chicago Board Options Exchange and other options markets around the world. lt is widely used, although often with adjustments and corrections, by options market participants. Many empirical tests have shown that the Black–Scholes price is ""fairly close"" to the observed prices, although there are well-known discrepancies such as the ""option smile"".The Black–Scholes model was first published by Fischer Black and Myron Scholes in their 1973 paper, ""The Pricing of Options and Corporate Liabilities"", published in the Journal of Political Economy. They derived a partial differential equation, now called the Black–Scholes equation, which estimates the price of the option over time. The key idea behind the model is to hedge the option by buying and selling the underlying asset in just the right way and, as a consequence, to eliminate risk. This type of hedging is called delta hedging and is the basis of more complicated hedging strategies such as those engaged in by investment banks and hedge funds.Robert C. Merton was the first to publish a paper expanding the mathematical understanding of the options pricing model, and coined the term ""Black–Scholes options pricing model"". Merton and Scholes received the 1997 Nobel Memorial Prize in Economic Sciences for their work. Though ineligible for the prize because of his death in 1995, Black was mentioned as a contributor by the Swedish Academy.The model's assumptions have been relaxed and generalized in many directions, leading to a plethora of models that are currently used in derivative pricing and risk management. It is the insights of the model, as exemplified in the Black-Scholes formula, that are frequently used by market participants, as distinguished from the actual prices. These insights include no-arbitrage bounds and risk-neutral pricing. The Black-Scholes equation, a partial differential equation that governs the price of the option, is also important as it enables pricing when an explicit formula is not possible.The Black–Scholes formula has only one parameter that cannot be observed in the market: the average future volatility of the underlying asset. Since the formula is increasing in this parameter, it can be inverted to produce a ""volatility surface"" that is then used to calibrate other models, e.g. for OTC derivatives.
  • studyres.com © 2026
  • DMCA
  • Privacy
  • Terms
  • Report