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The proposition stated in the following quotation is shown to depend on a very restrictive application of the assumption of competitive markets:
Persistent link: https://www.econbiz.de/10005133328
A simple formula is developed for the valuation of uncertain income streams consistent with rational risk averse investor behavior and equilibrium in financial markets. Applying this formula to the pricing of an option as a function of its associated stock, the Black-Scholes formula is derived...
Persistent link: https://www.econbiz.de/10005353614