| Thepricingtriangleisconsistedofreplicatingstrategy,ananalogueofBlack-ScholesPDE and the risk-neutral measure. This framework is shared by classical Black-ScholesmodelandBinomialtreesmodelbothofwhicharecomplete. Theincompletemodelssuchas stochastic volatility model and trinomial trees model do not have this property. Viaintroducing a new benchmark or the market price of risk, this framework is regeneratedin the two incomplete models. |
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