The hedging argument of Black and Scholes (1973) hinges on the assumption that a continuously rebalanced asset portfolio satisfies the continuous-time self-financing condition. This condition, which is a special case of the continuous-time budget equation of Merton (1971), is believed to...

"In this comprehensive book, the accounting perspective and the regulatory approach to risk and capital management are systematically discussed, with specifications for banks and insurance companies. By applying his own experience from both the financial industry and a supervisory institution,...