Questions tagged [finance]

Questions related to the various aspects of financial mathematics. Topics include option pricing, arbitrage theory, market completeness and stochastic analysis.

Mathematical finance, also known as quantitative finance, deal with finance and financial markets in a mathematical manner.

Some examples of mathematical finance are the fundamental theorem of asset pricing which provides the conditions for a market to be arbitrage-free and complete, and the Black–Scholes equation, which uses partial differential equations to describe the price of an option over time.

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Put and Call options, Financial derivative

Market Prices for European put and call options on ABC stock are as below: C0 = $4.5 P0 = $6.8 Exercise Price, X =$70 Risk Free Annual Compounded rate r = 5% Time to expiration T = 139 days Current Stock Price S0 = $67.32 Determine Synthetic call,…
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