1. Background material -- 2. Simple economics: complete and incomplete markets -- 3. Investment portfolio optimization -- 4. Pricing: neutral and indifferences -- 5. Hedging -- 6. Equity valuation and investing: continuous-time accounting -- 7. FX rates and FX derivatives

This paper discusses methodological aspects of equity valuation (stock pricing) in the context of continuous-time finance. The special emphasis of this study is to provide a framework and explicit formulas for the balance-sheet itemization of the product line contributions to the welfare of the...

The HARA and CARA theory of pricing, and the theory of partial, yet the most conservative hedging, of a single (liquid) tradable derivative contract under multidimensionality of risks in incomplete markets, including markets with non-hedgable interest rate risks, was developed by the author in a...

A claim of solving the dividend puzzle, as formulated by F. Black, is made. Various stock pricing formulas are established, extending substantially the classical Miller-Modigliani theory of valuation of shares in a way to contradict their main conclusion that dividends are irrelevant. Indeed,...

By means of the optimal portfolio approach, and in particular by finding what we call the quot;fundamental matrix of derivatives pricing and hedgingquot;, we have formulated a very compact, yet very general form of a Black-Scholes type pricing PDE, and of Black-Scholes type hedging, for any...

We establish a simple, yet completely general model for foreign exchange rates (FXR), in the context of multidimensional, possibly incomplete, Ito SDE market/econometric models. A very simple example is presented as well