Prof. Robert C. Metron and Prof. Myron S. Scholes have been awarded Nobel prize in Economics in 1997 for having developed a pioneering formula for the valuation of derivatives and other stock options. In fact, they developed this method in collaboration with Prof. Fischer Black, who died in 1995. In 1973 Black and Scholes published what has come to be [...]
For listed options the Black-Scholes model can be directly applied for valuation and it is commonly used by practitioners for such a purpose. However, for options that are not explicitly stated but embedded as part of the condition of another instrument and thus implicit, a less direct method (incorporating the standard binomial model) is commonly used by practitioners. This mode [...]
Financial futures contracts were first introduced by International Monetary Markets Division of Chicago Mercantile Exchange in order to meet the needs for managing currency risks, and promoted by a galloping growth in international business. London International Financial Futures and Options Exchange (LIFFE), set up in 1982 had been dealing in currency futures, but have restricted their activity to interest rate [...]