Two-Dimensional Risk-Neutral Valuation Relationships for the Pricing of Options

dc.contributor.authorFranke, Günter
dc.contributor.authorHuang, Jamesdeu
dc.contributor.authorStapleton, Richard C.deu
dc.date.accessioned2011-03-25T09:41:44Zdeu
dc.date.available2011-03-25T09:41:44Zdeu
dc.date.issued2007deu
dc.description.abstractThe Black-Scholes model is based on a one-parameter pricing kernel with constant elasticity. Theoretical and empirical results suggest declining elasticity and, hence, a pricing kernel with at least two parameters. We price European-style options on assets whose probability distributions have two unknown parameters. We assume a pricing kernel which also has two unknown parameters. When certain conditions are met, a two-dimensional risk-neutral valuation relationship exists for the pricing of these options: i.e. the relationship between the price of the option and the prices of the underlying asset and one other option on the asset is the same as it would be under risk neutrality. In this class of models, the price of the underlying asset and that of one other option take the place of the unknown parameters.eng
dc.description.versionpublished
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dc.identifier.ppn322457378deu
dc.identifier.urihttp://kops.uni-konstanz.de/handle/123456789/12010
dc.language.isoengdeu
dc.legacy.dateIssued2010deu
dc.relation.ispartofseriesCoFE-Diskussionspapiere / Zentrum für Finanzen und Ökonometrie
dc.rightsterms-of-usedeu
dc.rights.urihttps://rightsstatements.org/page/InC/1.0/deu
dc.subject.ddc330deu
dc.titleTwo-Dimensional Risk-Neutral Valuation Relationships for the Pricing of Optionseng
dc.typeWORKINGPAPERdeu
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kops.bibliographicInfo.seriesNumber2007/08deu
kops.citation.bibtex
@techreport{Franke2007TwoDi-12010,
  year={2007},
  series={CoFE-Diskussionspapiere / Zentrum für Finanzen und Ökonometrie},
  title={Two-Dimensional Risk-Neutral Valuation Relationships for the Pricing of Options},
  number={2007/08},
  author={Franke, Günter and Huang, James and Stapleton, Richard C.},
  note={Also publ. in: Review of Derivatives Research 9 (2006), 3, pp. 213-237}
}
kops.citation.iso690FRANKE, Günter, James HUANG, Richard C. STAPLETON, 2007. Two-Dimensional Risk-Neutral Valuation Relationships for the Pricing of Optionsdeu
kops.citation.iso690FRANKE, Günter, James HUANG, Richard C. STAPLETON, 2007. Two-Dimensional Risk-Neutral Valuation Relationships for the Pricing of Optionseng
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