Is the Black–Scholes formula correct
Is the Black–Scholes formula correct?
Expert
The Black–Scholes formula is not correct, if volatility is not constant. Again, here is the small caveat which the Black–Scholes formula can work when volatility is a known deterministic time function.
Explain various explanations regarding risk-neutral pricing.
Illustrates an example an arbitrage opportunity?
Illustrates an example of forward equation?
Which ratios the bankers are most interested in while considering whether to grant a short-term business loan?
A. What per visit price must be set for the service to break even? To earn an annual profit of $100,000
What are Uses of Wiener Process/Brownian Motion in Finance? Answer: This is the most common stochastic building block for random walks within finance.<
What is actual volatility? Answer: Actual volatility is the σ that goes in the Black–Scholes partial differential equation.
What is Margin Hedging?
Explain the term Serial Autocorrelation.
Explain the stochastic volatility in an option-pricing.
18,76,764
1934997 Asked
3,689
Active Tutors
1416098
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!