This paper proposes a unified framework for option pricing, which integrates the stochastic dynamics of interest rates, dividends, and stock prices under the transversality condition. Using the Vasicek model for the spot rate dynamics, we compare our framework with two existing models. The main...

In this paper, we provide a new framework for stock and options valuations by characterizing the joint dynamics of stock price, dividends, and volatility with the volatility feedback effect in continuous-time. Within our framework, we consider the properties of stock price and its dynamics with...