The option features embedded in many bonds and fixed-income securities have made the binomial interest rate tree approach to bond valuation a valuable model for pricing debt securities. Fundamental to the application of the binomial model to bond valuation is the assumption about the underlying...

Since the 1970s, the U.S. economy has experienced relatively sharp swings in stock prices, interest rates, and exchange rates, which has increased the exposure of many debt, equity, and currency positions to market risk. Faced with this risk, many institutional investors have increased their use...

This paper tests for the presence of the favourite-longshot bias in a new setting. This bias #150 the tendency for bettors to underbet favourites and overbet longshots #150 has been found in most studies of pari-mutuel and bookmaking betting markets in the USA, the UK and Australia. However,...