Publication Year

2005

Keywords

Stock Options, Brownian Motion, Finance, Black-Scholes formula, Central Limit Theorem, Private Valuation

Disciplines

Applied Mathematics | Finance and Financial Management

Abstract

The Black-Scholes formula is fundamental to modeling carried out in the financial world. Black-Scholes presents investment bankers a method of evaluating a stock in order to know how much to charge for a premium when dealing with options; a way of selling and/or buying securities at a predetermined time in the future. Understanding how Black-Scholes and options theory work relies on understanding probability, statistics, and Brownian motion. these tools make it possible for Black-Scholes to do its dirty work.

Department 1 Awarding Honors Status

Mathematics

Creative Commons License

Creative Commons Attribution-Noncommercial 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License

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