Sep 10, 2021

Derivatives Pricing Model

This is a dictionary of financial and investment terms that contains the following entries The theory of derivative pricing relates a number of variables and yields a theoretical price that can be used to gauge whether an option or other derivative is priced fairly by the market or if it is overpriced or underpriced. Among the best known and widely adopted is the basic Black-Scholes option pricing model. Developed by Fischer Black and Myron Scholes in the 1960s for equity options and modified in the 1970s for futures options, the model became more complex over time. Cox-Ross Pricing Model and the Bi Nomal Option Pricing Model are two others. Five variables are used by Black-Scholes

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