Functional form of coefficients in finite-difference methods

Explain the term functional form of coefficients in finite-difference methods.

E

Expert

Verified

Functional form of coefficients: The main difference between a single-factor interest rate option problem and an equity option problem is in the functional form of the volatility and the drift rate. These appear during the governing partial differential equations like coefficients.

   Related Questions in Financial Management

©TutorsGlobe All rights reserved 2022-2023.