Mathematical finance

retrospect, this does not seem very far from the truth with respect to my long-term career goals. I consider it a privilege to contribute meaningful work that would improve the financial standards in my country. My interest in a quantitative field like finance and economics comes as no surprise, since Mathematics is one of my favorite subjects and my forte right from secondary school. The power of these subjects to cater to practical applications in the real-world setting led to my close involvement with

limitations.  3. Strengths The Black-Scholes model is widely used due to the following strengths: 1. The formula is considerably easy to calculate. The call option price subjects to only five parameters which are deducible or measureable. It uses simple mathematical terms and option prices can be calculated within a short period of time. 2. It gives a very good approximation despite not perfectly correct due to the non-constant volatility. The model helps to give a first approximation in establishing hedges

Introduction. The essay will examine the strengths and weaknesses of the Black-Scholes model by first briefly understanding its birth in an effort to look to the intention on which the model is created to fulfil. This will then form the basis on which it will be assessed upon. Then the essay will examine the model's growth of usage, describe how the model functions and what it is used for, essentially outlining the model's strength. In so doing, the author will strive to highlight the benefits and

Rajdeep Atwal December 2015 The University of Leicester CT8: Financial Mathematics Black Scholes and Binomial Model   Contents Literature Review 3 Binomial model 3 Black Scholes 5 Justification 7 Binomial model 7 Black Scholes 11 Modified Exam Question 11 Binomial model 13 Black Scholes 16 Bibliography 16 Literature Review These models are very similar, they are based on similar theoretical foundations and have a series of assumptions, such as; Geometric Brownian Motion and risk-neutral

BEN BATES MBA | Working | Wilton | Mount Perry | Annual Salary | 55,000 | 98,000 | 81,000 | Expected increase | 3% | 4% | 3.50% | Work (years) | 38 | 36 | 37 | Tax rates | 26% | 31% | 29% | Annual tuition | | $63,000 | $80,000 | Books and other supplies (annual) | | $2,500 | 3,500 | Programs (year) | | 2 | 1 | Signing bonus | | 15,000 | 10,000 | Health insurance (annual) | | $3,000 | 3,000 | Room and board (annual) | | $20,000 | $20,000 | 1. How does Ben's age

Arundel Partners: The Sequel Project The maximum per-film price for the sequel rights that Arundel Partners should pay is $5.12M. If Arundel Partners were to use the traditional DCF methods to find the value of the sequel rights, the NPV would be -$8.42M loss per-film (see Appendix 1). Calculation Details We assume that Arundel Partners will purchase a portfolio of films similar to one used in the analysis. The average hypothetical net inflow of the sequel ($21.57M) is used to

1. Why might Bollenbach have opened his bidding for ITT at $55 per share? What was his likely strategy? The $55 value is on the lower range of the analyst eztimates, with a best guess estimate of $67.94. Since the value of the stock had been below $45 for 4 months, the offer of 55 dollars represented a 29% premium to investors. Bollenbach knew that management would be resistant of any attempt to be acquired, regardless of price, because of failed previous attempts to negotiate a friendly

User Ms Julie Ciarlante Course FIN-601-001 - FA 13-14 Test FIN 601 Final Exam Started 12/12/13 7:19 PM Submitted 12/12/13 9:25 PM Status Completed Attempt Score 126 out of 135 points   Time Elapsed 2 hours, 5 minutes out of 5 hours. Question 1 3 out of 3 points A bond with an annual coupon of $70 and originally sold at par for $1,000. The current market interest rate (yield to maturity) is 8%. This bond will sell at _______. Assuming no change in market interest rates

Introduction Energy investments have been evaluated using diverse methods. Santos et. al. (2014) argue that conventional approaches such as Net Present Value (NPV) or Internal Rate of Return (IRR) do not consider relevant project characteristics like irreversibility, uncertainty and management flexibility. They propose that the Real Options Approach (ROA) has an advantage over conventional methods. The aim of this essay is to apply real options to a renewable energy investment (mini-hydro plant)

its expected revenue of 208M at the time the exit happens. After the IPO, we presume the company will grow at a high rate for the next five years in the 75 percentile as proposed by Metrick, Andrew and Ayako Yasuda in their “Venture Capital and the Finance of innovation” book. We chose five years since the typical firm reaches maturity within five years after the IPO. Besides, we assume a tax rate of 30.64% given by the industry average (Damodaran 2013). As a discount rate, we use simply the industry