Trade and commerce in financial instruments such as stocks, bonds and contingent claims with the goal of exchanging future cash flows is as old as commerce itself. Commerce would be empty and meaningless without a clear perception of risk, thus the principal questions pertaining to commerce are:...

In practice, rather than to presume a hypothetical condition that needs be validated theoretically, it is sufficient to accept a real condition that exists and can be directly validated for practical purposes. This paper presents a practical approach to formulating the theoretical price of a...