What is Overconfidence Bias?Overconfidence bias occurs when individuals are overconfident of their talent, skills, or abilities. Usually, these individuals overestimate their beliefs and judgments than what is objectively reasonable. Their perception comes from a subjective viewpoint. The problem occurs when they let this confidence influence their decisions and other transactions. Overconfidence bias comes from a self-interest perspective. People tend to believe they are better than they actually are. Hence, they perceive their knowledge and skills as superior. Once individuals let this bias affect their decisions, they can make wrong decisions. As a result, they increase the chances of loss that they will make based on those decisions. How does Overconfidence Bias work?Overconfidence bias is relevant in various fields of life. When individuals come across decisions or events, they need their skills, abilities, experience, etc., to make the right decisions. Ideally, people must make decisions based on evaluating all of these factors properly. In some cases, however, they may end up overestimating them and lead to wrong decisions. Overconfidence bias drives people towards ignoring significant indicators that would affect their decisions. Instead, they end up relying on their skills or abilities to do so. However, they put overreliance on it and usually overvalue them. Overconfidence bias also depends on people's moral character. It tempts people to act in a way that does not consider all relevant factors. How does Overconfidence Bias impact investors?Overconfidence bias also applies to finance and investing. For investors, making the right decisions based on relevant information is crucial. Usually, they consider several factors using analytical tools and use them to form an opinion. However, some investors may underestimate the impact of such analysis and ignore them. Instead, they may put an overreliance on their skills in analyzing stocks. By neglecting all the crucial factors, investors can make wrong decisions. Similarly, they may end up misestimating their risks and returns from investments. There are several types of overconfidence that investors may illustrate. Based on the type they demonstrate, they will experience varying results. Overall, overconfidence bias can also be influential for investors. How to avoid Overconfidence Bias?The simplest solution to overcome overconfidence bias is for individuals to evaluate their skills and abilities. This way, they can form an opinion on how much they can rely on these skills or abilities in decision-making. However, doing so may not be possible practically. Nevertheless, investors can still evade the impact of overconfidence bias. For investors, understanding the risks associated with the investments is also crucial in avoiding this bias. Investors can employ various risk management strategies to evaluate their risks adequately. It is because investors tend to view their investments as being less risky than they actually are. This way, they won't put an overreliance on their skills and abilities. What are the types of Overconfidence?Individuals may demonstrate various forms of overconfidence in their decisions. These may include the illusion of control, planning fallacy, or contrary evidence related to overestimation. Some investors may also demonstrate timing optimism, desirability effect, or over-ranking. These factors also contribute to individuals’ overconfidence. ConclusionOverconfidence bias is when individuals overestimate their skills, abilities, or talent. Based on this overconfidence, they make decisions that come from a subjective viewpoint. Overconfidence bias can also occur in investing. When investors are overconfident of their skills, they neglect information that can be crucial. Overconfidence bias is avoidable in various ways, as mentioned above. Post Source Here: What is Overconfidence Bias?
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When investing, each investor will establish a risk appetite that defines the risk they are willing to take. Several factors contribute to how much uncertainty investors will accept. Based on that, some investors will face risks and get rewards for them. For some others, the uncertainty involving losses may be critical. Therefore, they may prioritize the risk of losses rather than their returns. What is Loss Aversion Bias?Loss aversion bias is when investors tend to prioritize avoiding losses in their transactions. During this, they try to avoid losses rather than focusing on making gains. Investors may face such bias due to several reasons. However, one of the primary factors for loss aversion bias is previous experiences. Investors that have suffered due to losses in the past are highly likely to allow loss aversion bias to affect their decisions. Loss aversion bias describes why individuals amplify the damages they suffer on their investments. Some investors may also perceive losses as twice as impactful as the gains they make. This bias may differ for each individual as it describes an individual's subjective tendency to prefer loss avoidance. When choosing between avoiding losses and making gains, these individuals will prioritize the former. How does Loss Aversion Bias work?Loss aversion bias is a part of behavioural finance. When faced with various financial decisions, investors may allow their experience with losses to influence their decisions. Similarly, the risk appetite that individuals have is also likely to affect their decisions. Due to this, they may avoid making decisions that can promise twice the gains over losses. Loss aversion bias comes from individuals' preferences and risk appetite. Due to this bias, they end up overestimating the impact of losses on their investments. Therefore, they prioritize the losses they can avoid rather than the gains they make. There are several factors that influence this bias in individuals, including their past experiences and the stakes involved. Some third parties may also manipulate investors to exploit their loss aversion bias. This way, they can force investors to take wrong decisions and make losses. These decisions can come in two forms. One form includes enticing investors to sell securities despite potential gains. Another form comes in tempting investors to hold onto their investments despite making huge losses. How can investors avoid Loss Aversion Bias?There are several methods that investors can use to avoid loss aversion bias. Firstly, investors can evade the influence of loss aversion by understanding how it works. Similarly, planning and critical thinking can also reduce the impact of loss aversion bias. In some circumstances, investors can also employ risk management strategies to mitigate their risks. These strategies may include the use of hedge instruments to offset their losses. Similarly, investors can reduce their risks by identifying relatively low-risk investments and making them a part of their portfolios. For some investors, obtaining certainty that comes with low-risk investments can also mitigate the effects of loss aversion bias. Overall, loss aversion bias is manageable through using a combination of risk management strategies. ConclusionLoss aversion is a term used to represent when investors overestimate the potential losses related to their decisions. In some circumstances, they may put double emphasis on their losses relative to the potential earnings they make. Therefore, they may avoid making rational decisions that can result in significant gains. Loss aversion, like any other type of bias, is avoidable in various ways. Originally Published Here: What is Loss Aversion Bias? Retail traders are often called noise, or uninformed traders as they contribute in large part to the noise in the stock market. The pandemic just accentuates this effect. A recent paper [1] examined the impact of retail trading on the market during the pandemic. It uses Robinhood traders as the proxy for retail investors and studies the impact of their activities on the stock market. The article concluded that retail traders increased the stock market volatility and reduced its efficiency. In this study, we examine the relation between Robinhood usership and stock market volatility. We assume that the average trader on Robinhood is at an informational disadvantage relative to other professional traders. The noise trading theory suggests that uninformed investors may create systematic risk by coincidentally responding to the same noisy signal (see e.g., DeLong, Shleifer, Summers, and Waldmann, 1987; Kelly, 1997). In agreement with this assertion, we find that Robinhood usership has a negative impact on stock volatility both in levels and percent change tests. On high Robinhood user trade activity days, volatility increases substantially. The article also predicted that the number of retail traders will increase, leading to a higher stock market volatility, The number of retail traders, or even Robinhood traders is only forecasted to increase. If our findings continue in relevancy, the degree of which we observe volatility will only increase, and this is without considering further extreme examples like GameStop or other unpredictable macroeconomic factors, taxing policy, scandals, etc. The increased market volatility caused by retail traders can result in difficulties for professional traders and investors, for example,
As for point #1, we can mitigate the impact of unpredictable price and volatility movements by developing strategies that rely less on historical data and more on market principles. Regarding point #2, one might think that going long volatility can lead to big gains, but this might not be the case. Designing a profitable long-volatility trade is not trivial. References [1] Jones, Cooper, Retail Trading and Stock Volatility: The Case of Robinhood (2021). All Graduate Plan B and other Reports. 1534. Originally Published Here: How Retail Trading Affects Stock Market Volatility and Trading Strategies What is Mental Accounting Bias?Mental accounting is a process that individuals use to assign subjective values to their money. However, these values go against the accepted economic principles. Mental accounting is a concept that comes from behavioural economics. Often, people tend to place varying values on the same amount of money based on their preferences. However, this process can lead to losses. Mental accounting leads to a behavioural bias that can influence the decisions that individuals make. It is also known as the "two-pocket theory". In mental accounting, people tend to classify their money and put them in mental accounts. The classification may occur on a different basis, such as where the money comes from or how they intend to use it. How does Mental Accounting Bias work?The concept of mental accounting bias comes from the work of an economics professor, Richard Thaler. He defined mental accounting as "the set of cognitive operations used by individuals and households to organize, evaluate and keep track of financial activities". Therefore, mental accounting works through the classification or categorization of money that individuals make based on their beliefs. Mental accounting bias influences individuals to make irrational decisions when it comes to their finances. Once they set aside money for a specific purpose, they fail to consider any drawbacks of using it. Similarly, they fail to consider their decisions as a part of an overall goal. Furthermore, individuals perceive losses and gains in different terms. All of these perceptions depend on the situation in which they are. Mental accounting is also closely related to the concept of the fungibility of money. This concept suggests that money is the same regardless of where it comes from or how individuals intend to use it. However, mental accounting goes against it because individuals differentiate between money based on these factors. By understanding this, individuals can also avoid the influence that mental accounting has on their decisions. How does Mental Accounting apply to investors?Mental accounting bias is prevalent for investors. Some investors like to classify their portfolios into two categories. One includes safe stocks that they can use as a substitute for any losses from the other category. The other classification is speculative portfolios that investors use to make high-risk investments. Mental accounting can lead to investors taking irrational decisions. When investors compare losses and profits, they end up perceiving both differently. Although both may have the same monetary values, investors tend to make categories for each based on a mental account. Therefore, it leads investors to think in relative terms rather than viewing decisions in absolute terms. How to avoid Mental Accounting Bias?Mental accounting can occur for all individuals. However, it is still avoidable. Individuals that demonstrate mental accounting can use deliberate planning to break bad financial habits. These may include creating budgets or making plans for any unexpected income or gains they receive. Furthermore, individuals that suffer from mental accounting can also look at the whole picture. This way, they can perceive decisions in absolute terms rather than relative terms. Using all of these techniques, individuals can avoid the adverse effects of mental accounting bias. ConclusionMental accounting bias is when individuals assign subjective values to their money. These values may come from how they perceive their money. Mental accounting bias can cause several problems and result in losses for individuals. It is also common for investors to illustrate such behaviour. However, mental accounting bias is avoidable through proper planning and deliberate decision-making. Post Source Here: What is Mental Accounting Bias? In finance and investing, making accurate predictions based on certain factors is critical. If an investor makes the correct prediction, they can expect high returns. However, wrong forecasts can also be vital, as they can cause losses. There are several factors that may influence whether someone makes the correct predictions. However, there are some influences that may cause adverse effects. One of these includes the hindsight bias. What is Hindsight Bias?The term hindsight bias refers to the tendency of people to think of unpredictable events as predictable after they have occurred. In this bias, individuals pretend they knew the outcome after its occurrence. It also happens when individuals assume they have exclusive insight in predicting an outcome. Based on this bias, they make wrong predictions in the future and end up suffering losses. Hindsight bias is crucial in various aspects of life. However, it can be more influential for investors that decide on their portfolio. Once an event occurs, investors may assume they knew the outcome from before. Based on this confidence, they make decisions about the future. These decisions don't turn out to be accurate, which leads to losses. How does the Hindsight Bias work?Hindsight bias starts with an event with an unpredictable outcome. Once the event occurs, individuals may assume they predicted the result. This outcome may or may not be in line with their original prediction. However, since they know the final result after the event, they assume that the consequence was predictable. The bias occurs when these individuals allow this confidence to influence future decisions. In finance, investors face hindsight bias after they see their predictions realize for stocks. However, due to the high frequency of transactions, the right forecasts make a small proportion of the total predictions. Nonetheless, investors use it to base further decisions. They believe their predictions will come true because of that one-off event. There are several factors that contribute to the existence of hindsight bias. These may come from cognitive, metacognitive, or motivational variables. When these factors occur at the same time, the chances of hindsight bias are the highest. Investors that allow these variables to influence their decisions can end up making the wrong investments. Through that, they can suffer considerable losses. How to avoid Hindsight Bias?There are several ways in which individuals can avoid hindsight bias. Like other biases, understanding how this bias affects the decision-making process is crucial. People who are aware of this bias are also likely to prevent it from influence their decisions. Similarly, having and considering all the available information can be critical in avoiding any bias, including hindsight. Hindsight bias occurs after an event has occurred, and individuals perceive the outcome as predictable. However, instances, where people get the correct prediction, are significantly lower than when they get it right. Therefore, considering both of these instances can be critical for individuals. Once individuals learn from their wrong predictions, they can avoid hindsight bias from affecting their decisions. ConclusionHindsight bias is when individuals consider an event as predictable after its occurrence. Based on this assumption, they transfer the confidence to other transactions or events. It then leads to them making wrong decisions and bearing losses. Hindsight bias is avoidable like other biases. Individuals have to be aware of its existence and how it affects decision-making. Article Source Here: What is Hindsight Bias? What is the Illusion of Control Bias?The illusion of control bias is a type of bias in behavioural finance that gives people the illusion of control. People that inherit this behaviour tend to overestimate the power or control they have over a circumstance. Therefore, they tend to think they have more control over events than they actually do. Even in situations where randomness or uncertainty plays a significant role, people tend to overestimate their control level. In behavioural finance, the illusion of control bias is one of the positive illusions. These are illusions in which people have favourable attitudes towards themselves even when they are unrealistic. The illusion of control bias affects people of all fields. In finance and investing, where uncertainty is prevalent, this bias can be critical. The term “illusion of control” comes from the work of Ellen Langer, a Harvard psychologist. In this work, the author conducted various experiments to check how this bias occurs. She found that there are several factors that play a role in people’s confidence. However, none of these included the end result. Instead, they focused on things that happened during the process. How does the Illusion of Control Bias work?The illusion of control occurs when people overload themselves with a substantial amount of information. When this happens, their brains start taking shortcuts that help them in the decision-making process. Taking shortcuts helps reduce the time and stress for these people. However, it also exposes them to the impression that they have control over the process. In most circumstances, when people believe they have more control over something than they really do, they take shortcuts. They do so instead of taking their time to find logical solutions or contemplating alternative outcomes. For people, it also leads to believing in superstitions or paranormal events. Therefore, the illusion of control can give them a fake sense of control in circumstances where they don’t have any. Why is the Illusion of Control Bias important?The illusion of control bias shows how people make irrational decisions that lead to adverse outcomes. Most of these decisions come from overconfidence in the process that people put into it. Most people tend to ignore factors that would suggest not taking the decision. Instead, they end up placing confidence in decisions where chance or possibility plays a substantial role. The illusion of control bias is also critical as third parties can use it to influence people's decisions. Factors such as competition, choice, stimulus, or response familiarity affect how much confidence people put in their decisions. When people don't understand the implications of their confidence, they end up making the wrong decisions. How can individuals avoid the Illusion of Control bias?Like most other biases, people can avoid the illusion of control bias by understanding how it works. They can also consider external sources of information rather than relying on their instincts. Similarly, through critical thinking during these decisions, people can avoid the illusion of control bias. It includes not establishing casual links between choices and outcomes when none exist. ConclusionThe illusion of control bias refers to when people overestimate the control they have over an event. In that case, they end up taking the wrong actions, which leads to losses. There are several factors that may cause this type of bias to occur. Therefore, it is crucial for decision-makers to understand these and not allow them to influence their decisions. Originally Published Here: The Illusion of Control Bias Behavioural finance refers to the study of psychological influences and biases that affect the behaviour or decisions of investors. It also studies how these influences affect the market. One of the primary areas in behavioural finance is the study of biases. A behavioural bias is an irrational belief that can affect an investor's decision making, mostly unconsciously. One such bias comes from the representativeness heuristic. What is Representativeness Heuristic?Representativeness heuristic refers to the process individuals go through when estimating the likelihood of an event. When faced with such decisions, individuals usually use mental shortcuts or preexisting beliefs to make comparisons. This preexisting belief or mental shortcut is known as representativeness heuristic. This process consists of making decisions based on how they compare to beliefs that individuals have in their minds. Representativeness heuristic can be significantly helpful in any decision-making process. It is because it helps make the process faster and, thus, shorter. However, it can also lead to individuals making wrong decisions. Heuristics, or these mental shortcuts, can help in many fields. However, in deliberate decision-making, they can cause biased decisions. How does Representativeness Heuristic cause bias?Representativeness heuristic involves finding similarities between decisions and acting accordingly. However, it can cause biased opinions, especially when individuals establish resemblance even where none exists. There are many reasons why individuals may make such comparisons. However, the primary cause is having preexisting beliefs or opinions about a specific object or event. Another reason why representativeness heuristic bias may occur is due to time or resource constraints. When individuals don't make decisions by comparing all the available information, it causes them to establish biased opinions. These opinions usually come from existing beliefs or mental shortcuts. Although there may be no or minor similarities between their existing beliefs and the specific decision, they still make comparisons. How can individuals avoid Representativeness Heuristic Bias?Like most other biases, one of the most efficient protection against representativeness heuristics is knowing it exists. When individuals are aware of the tendency to make comparisons even when none exist, they will make better decisions. Similarly, reflecting on their judgments for every decision can be helpful in establishing whether they have a biased opinion. Another counteraction against this bias is being open to information. Often, individuals ignore information that can change their decisions. The primary cause of this comes from their tendency to compare new events with preexisting beliefs. Once they consider new opinions or feedback, they can make better decisions. Lastly, through critical thinking and applying logic to decisions, individuals can avoid representativeness heuristic bias. Why is Representativeness Heuristic Bias crucial?The representativeness heuristic is crucial for individuals from all fields for several reasons. One of the primary reasons is that it gives rise to various other biases. For example, the representativeness heuristic can lead to conjunction fallacy or gambler's fallacy. Furthermore, it can also be used to influence or manipulate individual’s opinions. For investors, the representativeness heuristic can also be crucial. During the investing process, investors come across various options that may have some resemblances. Usually, however, these similarities are not prominent. Despite that, investors end up making decisions based on them. Consequently, it leads to substantial losses for them. ConclusionThe representativeness heuristic is a process in which individuals use mental shortcuts when estimating the possibilities of events. It can cause them to make comparisons and seek out similarities where there are none. The representativeness heuristic is avoidable in several ways. Despite that, individuals let it influence their decisions. Originally Published Here: What is Representativeness Heuristic Bias? Behavioural finance is a field of behavioural economics that deals with the psychological influences and biases that affect investors. These biases exist in the decisions that investors make and can cause them to make the wrong choices. There are several types of biases that investors may face during their investing process. One of these includes confirmation bias. What is Confirmation Bias?Confirmation bias is a type of bias that occurs when investors prefer information that confirms a belief they have had previously. Their belief may not be correct. However, since they come across information that supports it, investors tend to favour that information. Some investors may also actively seek out information that confirms their beliefs. Confirmation bias also represents the bias that investors may have against any information that does not support their beliefs. Usually, investors tend to put more focus on any information in support of their views. When they come across information that contradicts their belief, they ignore it. Confirmation bias can, therefore, lead to irrational investment decisions by ignoring crucial information. How does Confirmation Bias work?Confirmation bias starts from a preexisting belief that individuals have. These beliefs may or may not be true. When looking for investments, these individuals will look for information that supports their views about the decision. During the process, if they come across any information that disregards their beliefs, they tend to ignore it. Usually, they don't do so deliberately. Instead, this process occurs unintentionally, and they don't have any control over it. When investors come across any information that confirms their beliefs, they gain confidence in it. They may look for further evidence to support their preexisting views. The more information they come across in support of it, the more reliance they develop over it. As a result, they will end up making the wrong decisions. These decisions can relate to buying or selling stocks or the type of investment they make. Confirmation bias doesn't only apply to finance or investing. It is prevalent in all fields of life. One of the simplest ways of protecting against confirmation bias is to realize it exists. However, that may not be possible since it is a subconscious process. Individuals can also reduce confirmation bias in their dealings by obtaining a second opinion or studying contrasting beliefs. What is an example of Confirmation Bias?An investor comes across an opinion that suggests that the real estate market will boom in the future. The investor believes the opinion is accurate. Based on that opinion, the investor seeks investments in the real estate market. During the analysis phase, they come across various publications that suggest the real estate market will go down. Although the information contradicts the original opinion formed by the investor, the investor does not consider it. Instead, the investor actively searches for publications that confirm their view. Eventually, the investor comes across an unverified article that presents the same opinion as to their belief. Based on that information, the investor invests in the market. However, the real estate market goes down, and all real estate value falls. The investor makes a significant loss for investing in the market. In this scenario, the investor developed confirmation bias when they chose to believe an unverified article instead of several publications. ConclusionConfirmation bias is a type of bias that occurs when investors favour information that confirms their preexisting views. They actively disregard any information that contradicts their opinion and instead seek out information that validates it. Based on this, they make decisions, which leads to losses in the future. Post Source Here: What is an Example of Confirmation Bias What is Adaptive Market Hypothesis?The adaptive market hypothesis (AMH) comes from the works of Andrew Lo from 2004. This hypothesis brings together the principles of the efficient market hypothesis (EMH) and behavioural finance. It does so by applying the principles of evolution to financial interactions. These principles include adaptation, competition, and natural selection. In economics, most traditional financial economics theories contradict the principles set forth by behavioural models. However, with the help of the adaptive market hypothesis, these models can coexist. This theory applies the evolutionary biology framework to specific financial concepts. Similarly, AMH has five principles, which it suggests are crucial for adaptive markets. What are the two parts of the Adaptive Market Hypothesis?As mentioned, the adaptive market hypothesis brings the efficient market theory and behavioural finance. Although these have contradicting views, AMH seeks to explain how these apply to practical situations. A brief description of each of these is as below. Efficient Market HypothesisOne of the core parts of the adaptive market hypothesis is the efficient market hypothesis, or simply, the efficient market theory. This theory suggests that all stock prices reflect all information. Therefore, stocks will always trade at their fair value on stock exchanges. It further implies that investors can’t benefit from overvalued or undervalued stocks. Behavioural FinanceBehavioural finance is a field of behavioural economics, which suggests that psychological influences and biases can affect investor's financial behaviours. Furthermore, it seeks to explain how these influences and biases cause market anomalies. Behavioural finance also proposes that investors are irrational in their decision-making. What are the principles of the Adaptive Market Hypothesis?The adaptive market hypothesis has five basic principles. These include the following.
How does the Adaptive Market Hypothesis work?The adaptive market hypothesis seeks to consolidate the principles of the efficient market theory with behavioural finance. EMH implies that investors are rational and efficient. However, this view comes as a contradiction to the principles of behavioural economics, which suggest they are irrational and inefficient. Both of these beliefs are the complete opposite of each other. The adaptive market hypothesis further suggests that people are primarily rational. However, they may act or become irrational in some cases. These cases usually involve a reaction to new opportunities opening up or fluctuations in market volatility. The theory also implies that people always act in their self-interest, which is one of its principles. During their activities, people may commit several mistakes. However, AMH suggests that people learn from those mistakes. Then, they adapt accordingly. They make best guesses based on trial and error. Every time their tactic fails, they will take a different approach next time. If it succeeds, they will use a similar strategy again. This way, the process of natural selection occurs. ConclusionThe adaptive market hypothesis combines the principles presented by the efficient market hypothesis and behavioural finance. While the efficient market hypothesis states that investors are rational, behavioural finance suggests otherwise. AMH proposes five principles and seeks to apply the evolutionary biology framework to specific finance concepts. Post Source Here: Adaptive Markets Hypothesis Black-Scholes-Merton (BSM) is a celebrated option pricing model that is used frequently in the financial industry [1]. The model was developed initially for equity options but then has been extended to many asset classes. It is so frequently used, to the point that the practitioners almost do not pay attention to the underlying assumptions of the model. But once in a while, a situation will arise that would bring the assumptions back to the attention. A recent example was last year when the price of the front-month oil futures went negative, and the pricing models were not capable of handling the negative price. Recall that the underlying assumptions of the BSM model are as follow,
The above assumptions are not always realistic; they are sometimes violated. Over the years, a large body of academic research has dealt with relaxing these assumptions and extending the BSM model. A recent paper [2] proposed a model that incorporates stochastic volatility, stochastic interest rate, and transaction costs into the BSM model. The authors derived a non-linear partial differential equation and then used a finite-difference scheme, implemented in Matlab, to solve it. This paper considers the problem of pricing options with transaction costs under the Heston-CIR model, which is a combination of the stochastic volatility model introduced by Heston and the stochastic interest rate model driven by the Cox-Ingersoll-Ross (CIR) process. We obtain the numerical solution to the PDE of the Heston-CIR model with transaction costs by implementing the finite difference scheme in MATLAB. More precisely, we consider the Heston-CIR model with a partial correlation, derive a pricing formula for zero-coupon bonds and analyze the delta hedging portfolio of the Heston-CIR model with transaction costs. We use the replicating technique and substitute the solution of zero-coupon bonds to derive the PDE for European call options. We then obtain numerical solutions to the PDE of the Heston-CIR model with transaction costs by implementing the finite difference scheme in MATLAB. References [1] F. Black, and M. Scholes, The pricing of options and corporate liabilities, Journal of Political Economy 81, 639–654, 1973 [2] J. Cao, B. Wang, W. Zhang, Valuation of European Options with Stochastic Interest Rates and Transaction Costs, International Journal of Computer Mathematics, 2021 Post Source Here: Valuation of European Options with Stochastic Interest Rates and Transaction Costs |
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