Rational pricing is the assumption in financial economics that asset prices – and hence asset pricing models – will reflect the arbitrage-free price of...

either general equilibrium asset pricing or rational asset pricing, the latter corresponding to risk neutral pricing. Investment theory, which is near...

Psychological pricing (also price ending or charm pricing) is a pricing and marketing strategy based on the theory that certain prices have a psychological...

See Rational pricing § The law of one price. The intuition behind the law of one price is based on the assumption that differences between prices are...

The forward price (or sometimes forward rate) is the agreed upon price of an asset in a forward contract. Using the rational pricing assumption, for a...

#Asset pricing theory above) Equilibrium price market efficiency economic equilibrium rational expectations Arbitrage-free price Rational pricing § Arbitrage...

economics models. Rational pricing is the assumption that asset prices (and hence asset pricing models) will reflect the arbitrage-free price of the asset...

payable on the purchase price. Any other cost price would yield an arbitrage opportunity and riskless profit (see rational pricing for the arbitrage mechanics)...

notion of a replicating portfolio is fundamental to rational pricing, which assumes that market prices are arbitrage-free – concretely, arbitrage opportunities...

present value terms. For an arbitrage proof of why this is the case, see Rational pricing below. For an asset that pays known income, the relationship becomes:...

martingale measure. Arbitrage pricing theory Asset pricing Financial economics § Arbitrage-free pricing and equilibrium Rational pricing Sources Varian, Hal R...

The Brownian model of financial markets Rational pricing assumptions Risk neutral valuation Arbitrage-free pricing Valuation adjustments Credit valuation...

arbitrage pricing theory (APT) is a multi-factor model for asset pricing which relates various macro-economic (systematic) risk variables to the pricing of financial...

application of the law of one price; see also Rational pricing and #Futures. The spot-future parity condition does not say that prices must be equal (once adjusted)...

logic see section "risk neutral valuation" under Rational pricing as well as section "Derivatives pricing: the Q world" under Mathematical finance; for details...

Post-autistic economics Rational agent Rational choice theory Rational pricing Superrationality Bounded rationality Rationality and power List of alternative...

Binomial options pricing model; Trinomial tree Monte Carlo methods for option pricing Finite difference methods for option pricing More recently, the...

portfolio. See Rational pricing § Delta hedging for details. Delta measures the sensitivity of the value of an option to changes in the price of the underlying...

arguments ("rational pricing") apply when the deliverable asset exists in plentiful supply or may be freely created. Here, the forward price represents...

(b) Arbitrage arguments then allow for the option's price to be estimated today; see Rational pricing § Delta hedging. (c) When hedging of this sort is...

neutral valuation. Here the price of the option is its discounted expected value; see risk neutrality and rational pricing. The technique applied then...

frontier," Journal of Financial and Quantitative Analysis 7, September 1972, 1851-1872. Rational pricing § Risk neutral valuation Risk-neutral measure...

will then quickly reprice to its correct level. Here, we apply the rational pricing logic relating to "Assets with identical cash flows". In detail: (1)...

more complex derivatives, pricing involves developing a complex pricing model: understanding the stochastic process of the price of the underlying asset...

Code ClearCase Rational DOORS Rational Performance Tester Rational Rhapsody Rational Rose Rational Software Modeler Rational Synergy Rational Unified Process...

a more accurate price can be obtained than if the price is calculated with a present-value pricing approach. Arbitrage-free pricing is used for bond...

consistent with the selected prices; see Rational pricing § Fixed income securities and Bond valuation § Arbitrage-free pricing approach. Note that some analysts...

terms of bond prices, or as a portfolio of forward contracts. The fact that these methods agree, underscores the fact that rational pricing will apply between...

to have a pricing adjustment, to equate their value to IRSs under a no arbitrage principle. Otherwise this is considered rational pricing. This adjustment...

complex to value. There are many pricing models in use, although all essentially incorporate the concepts of rational pricing (i.e. risk neutrality), moneyness...