In this paper we begin with details of the no arbitrage pricing scheme. It is common to call the pricing approach no arbitrage if it is impossible to receive a positive profit on a contract starting from zero investment at initiation date. We specify no arbitrage pricing by a) initiation and...

In this paper we develop a model of corporate bonds pricing. We begin with default definition which is similar to one that is used in the standard reduced form of default model. The primary distinction between our model and reduced form of default model is interpretation of the date-t price of...

In this paper we present a critical point on connections between stock volatility, implied volatility, and local volatility. The essence of the Black Sholes pricing model is based on assumption that option piece is formed by no arbitrage portfolio. Such assumption effects the change of the real...