Thank you so much, better than my professor. I think if you made videos explaining the homework exercises at the end of each chapter, it would be beneficial to all.
i am not done watching this video yet... i am currently at time 8:03. i am trying to understand one period binomial model but so far i think you're a legend!!!!!! wow... thanks so much. lol when i am done watching this i hope to really understand it the way i think i am getting it then i will owe you a lot man
Thank you for the nice video. On pg2, in the last sentence of para 3, it says 'the mathematicswe develop requires only that r>-1'. Can anyone please help me with this point. Why this is important?
Hi prasad if you notice 1/(1+r) is used to discount cash-flows if r = -1 you are dividing by 0 if r < -1 you can discount positive cash-flows and find negative PV
If you could help me with this task I would be very grateful, cause I have lost my mind solving it....... Consider a one period market model composed of a bank account with interest rate r = 0 and a stock whose price at time 0 is S0 > 0. Assume that the stock price S1 at time one is given by S1 = N + 1, where N is a Poisson distributed random variable with parameter one. Determine for what values of S0 the market is free of arbitrage.
@@mbaye501 Well, does it make a big difference? Is there any rule in the market that guaranty to stop your losses at '0'? If so why it was not applied to the commodity market? Am I missing something here? I am trading index for past 15 years in very small quantities, so I can understand technical terms if you are using that in your reply. Thanks.
@@mbaye501 Well, as you mentioned there are associated costs with commodity positions. In the same way there are associated costs with shares. Since these stocks are held in digital depositories, they can charge fees to hold it, also with large investments firms , they have interest rates and admin costs (holding costs like commodity). So, theoretically if value is .25 cents/pence/ etc , the real (practical ) value is below that which can be be negative in the balance sheet. So share value becomes zero is only a theoretical assumption and derivative of that can still hit below zero if there is no restriction from the regulators.
Thank you so much, This first chapter was easy to comprehend
This online course is super helpful to studying the book.
Thank you so much, better than my professor. I think if you made videos explaining the homework exercises at the end of each chapter, it would be beneficial to all.
Thank you so much! You explain the book so clearly!!!!
Oh my god I can't believe that knowledge is free thank you so much,,,❤❤❤❤❤
It's my pleasure
i am not done watching this video yet... i am currently at time 8:03. i am trying to understand one period binomial model but so far i think you're a legend!!!!!! wow... thanks so much. lol when i am done watching this i hope to really understand it the way i think i am getting it then i will owe you a lot man
Happy to hear ! Glad that it was useful
Thanks for this video, it helped me a lot
Happy to heard that 😀
Thank you for making this
Woaw you used stochastic books by Steve shreve for the script of your video
what if it doesn't give you cash position nor delta_0, but asks you to find them instead?
Thank you for the nice video. On pg2, in the last sentence of para 3, it says 'the mathematicswe develop requires only that r>-1'.
Can anyone please help me with this point. Why this is important?
Hi prasad if you notice 1/(1+r) is used to discount cash-flows if r = -1 you are dividing by 0 if r < -1 you can discount positive cash-flows and find negative PV
If you could help me with this task I would be very grateful, cause I have lost my mind solving it....... Consider a one period market model composed of a bank account with interest rate r = 0 and a stock whose price at time 0 is S0 > 0. Assume that the stock price S1 at time one is given by S1 = N + 1, where N is a Poisson distributed random variable with parameter one. Determine for what values of S0 the market is free of arbitrage.
THANK YOU SO MUCH]
Which book do you recommend for a better understanding of the subject.
I would recommend reading John Hull options and derivatives book. He does a decent job explaining some of these things at a more accessible level
Hi Balakrishna, have you gone through Steven Shreve book 1 ? Do you live in India too?
Well you assumed that stock prices cannot go negative. But it can , as evident from recent crash of Crude prices during Covid.
Crude is not a stock it’s a commodity
@@mbaye501 Well, does it make a big difference? Is there any rule in the market that guaranty to stop your losses at '0'? If so why it was not applied to the commodity market? Am I missing something here? I am trading index for past 15 years in very small quantities, so I can understand technical terms if you are using that in your reply. Thanks.
@@nakulant958 the question is do you understand why crude went negative ? Because if you did that would answer your question
@@mbaye501 Please enlighten me, thanks.
@@mbaye501 Well, as you mentioned there are associated costs with commodity positions. In the same way there are associated costs with shares. Since these stocks are held in digital depositories, they can charge fees to hold it, also with large investments firms , they have interest rates and admin costs (holding costs like commodity). So, theoretically if value is .25 cents/pence/ etc , the real (practical ) value is below that which can be be negative in the balance sheet. So share value becomes zero is only a theoretical assumption and derivative of that can still hit below zero if there is no restriction from the regulators.