Based on the background of the banking industry in China, this paper establishes Cournot, Bertrand and Stackelberg mixed oligopoly competition models with deposit and interest rates as strategic variables between a representative state-owned bank and a representative foreign bank. We discuss and...

This paper has used the Arbitrage Theorem (Gordan Theorem) to show that first, all securities are derivatives for each other, and they are priced by the same risk neutral probability measure. Second, after the firm changes its debt-equity ratio, the equityholders can always combine the new...

This paper shows that the risk seeking in the domain of losses phenomenon of prospect theory may be just: people misuse the concept of opportunity cost in the domain of losses. The reference points of Kahneman et al.'s (1979) value function in the domain of gains and in the domain of losses are...

Behavioral economics, notably developed by Daniel Kahneman, Amos Tversky and Richard Thaler, has found consistent and pervasive anomalies in common people's daily behaviors. This paper has employed the concepts in traditional economics (e.g., choice, relative price, and opportunity cost) to...

This paper has proposed new option Greeks and new upper and lower bounds for European and American options. It also shows that because of the put-call parity, the Greeks of put and call options are interconnected and should be shown simultaneously. In terms of the theory of the firm, it is found...

By using the binomial option pricing model, this paper proves that with no arbitrage and no transaction costs, (i) under riskless debt, increasing the debt-equity ratio increases the variance of the rate of return on equity; and (ii) under risky debt, increasing the debt-equity ratio increases...

This paper has used the Arbitrage Theorem under binomial case to show that in a complete market with no transaction costs and no arbitrage, for any asset, the current spot price is a function of the risk-free interest rate, the future possible prices and their probabilities. These probabilities...

This paper shows that Modigliani-Miller's first proposition can hold in an economy where there is no capital market for lending and borrowing, and there is no need to assume that individuals and corporations can borrow at the same rate. Modigliani-Miller's second proposition has nothing to do...

This paper has proposed new option Greeks and new upper and lower bounds for European and American options. It shows that because of the put-call parity, the Greeks of put and call options are interconnected and should be shown simultaneously. In terms of the theory of the firm, it is found that...