In this paper we present a critical point on connections between stock volatility, implied volatility, and local volatility. The essence of the Black Sholes pricing model is based on assumption that option piece is formed by no arbitrage portfolio. Such assumption effects the change of the real...

The concept of the Local Volatility was developed in [1-3]. Later this concept was broadly generalized and extends in particular to cover stochastic local volatility phenomena. A number of companies offer their products which call for more accurate forecast of options pricing and one can check...

In this paper, we present effect of the liquidity on risky bonds pricing. The liquidity effect is represented by the adjustment to the single price format. We begin with bid-ask pricing format and it helps to observe effect of the liquidity on each step of pricing. In the first section, we...