StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Finance Modeling - Assignment Example

Cite this document
Summary
Later, the black shoe model was used to determine the volatility implied in the variance. Actual values are used in place of other value and then the model is used to calculate the variance…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.3% of users find it useful
Finance Modeling
Read Text Preview

Extract of sample "Finance Modeling"

Implied Variance for the Black Scholes Model Introduction The variance of security was determine using observation of historic price behaviour. Later, the black shoe model was used to determine the volatility implied in the variance. Actual values are used in place of other value and then the model is used to calculate the variance (Fengler 15)DiscussionWhen we examine the Black Scholes model, we see that it would be impossible to manipulate the equation so that V ends up on the left-hand side all by itself.

This forces us to use an iterative approach to solve for the volatility. The custom Black Scholes function that we constructed in the previous project makes it easy for us to solve for call prices. Therefore, we can set things up so that we can try different variances until we find the one that gives us the actual (known) call price that is observed in the market (Chris 45)Table 1Name Stock priceExpiry dates for optionsExercise price Market priceOption123223rd April 3rd April3rd AprilOption 218163rd April3rd April3rd AprilOption 325243rd April3rd April3rd April Calculations Use a risk-free rate of 2%.

Compute the fraction of years remaining on the option.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Finance Modeling Assignment Example | Topics and Well Written Essays - 500 words”, n.d.)
Finance Modeling Assignment Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/finance-accounting/1683552-finance-modeling
(Finance Modeling Assignment Example | Topics and Well Written Essays - 500 Words)
Finance Modeling Assignment Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/finance-accounting/1683552-finance-modeling.
“Finance Modeling Assignment Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/finance-accounting/1683552-finance-modeling.
  • Cited: 0 times

CHECK THESE SAMPLES OF Finance Modeling

Rich Pictures

Use Case modeling is extensively used in software application modeling process and object oriented programming.... Requirement analysis is critical to the success of a process or product.... Businesses use it extensively before developing or modifying an existing system....
12 Pages (3000 words) Article

Different Approaches to Investing

All such basic analyses when selecting a security is called Analytical modeling.... There are basic types of modeling, Technical and Fundamental.... The objective is to guide the nave people how to invest in stock market, how to manage the stocks and by providing them with basic knowledge of different approaches of investing....
3 Pages (750 words) Essay

A Risk Management Approach to Business Valuation

It is also of interest because it could allow for the professional application of modeling to an area of widespread interest and concern amongst all communities of investors.... Investment valuation is like selling an ageing automobile: econometrists love to cloak recommendations in numbers and words that we hope most people will not understand, and then look for escape routes in to eternity!...
8 Pages (2000 words) Essay

Financial modelling

This is due to the fact that it involves the day to day activities of people.... The objective of the given topic is to find out the application and the use of Fama and… The model is one developed by economists to compare it with the Capital Assets Pricing Model and prove its effectiveness (Lornax, 2007, 167). In order to achieve the ultimate results, it was important to make sure that the study and the results This diversification was given a priority in the study and thus the tests were carried out on 10 different stocks....
3 Pages (750 words) Assignment

The Competing Rights and Responsibilities - Cantander Bank

According to Gray, a mortgagee lends money to a mortgagor and the mortgagor is obligated to re-pay the mortgage in course of the stipulated period as well as the periodical amounts of interest specified.... In this case, Cantander Bank is the… In order to acquire Valiant Villa, Ben and Ali agreed to approach Cantander bank to negotiate for a mortgage worth £ 125,000....
13 Pages (3250 words) Assignment

Fraud And Errors of the Companys Financial Statement

This paper "Fraud And Errors of the Company's Financial Statement" focuses on audit risk - the risk that the auditor expresses an inappropriate opinion because of intentional miscalculations like fraud and errors of the company's financial statement.... Identifying and assessing this risk is crucial in the audit process....
6 Pages (1500 words) Case Study

Salary and benefits of becoming a financial manager

om precisely reports, “Average finance Managers in the United States make around $83K per year.... Individual bonuses, profit sharing and commission for finance Managers — as high as $19K, $13K and $87K, respectively” (Pay Scale).... om/salary/finance-Manager.... finance Manager Salary (United States)....
1 Pages (250 words) Essay

The Prime Reason Behind Selecting the IRR Method of Appraisal

The sole job of these financial analysts is to identify whether a particular investment is likely to bring inflow or outflow of benefit to the company.... Investment appraisal through the NPV method and IRR method are both very useful in order to financially attractive perspective of any investment decision....
9 Pages (2250 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us