Does the Black-Scholes formula contain information regarding the rate of return of the stock?
It seems that vast popularity Black-Scholes formula has become primarily because it contains no assumptions about non-random, predictable the rate of return of the stock changing. Our analysis shows that according to the formula Black-Scholes average value of the rate of return of the stock equal to the interest rate r that is not dependent on the characteristics of a particular stock. Thus, the model of the Black-Scholes has quite specific information about the rate of return of the stock. Download MS Word document ———————————————————————————————— Mark Ioffe – Calculator for Public-Private Investment Fund. This article describes calculator for the Geithner public-private scheme to buy toxic assets. Principal problem for investor is to define whether it is good or bad investment, because nobody knows what assets are really worth because it depends on future events. We consider 2 stochastic models for future asset: discrete
