The Study Of The Embedded Option Pricing Method

In the financial derivative market of the twentieth century, option is a successful model of innovation. The option market has become an indispensable part in the international financial market.Since the embedded option bonds, its embedded options can change their future cash flow, it can grasp the relationship between risk and return of market participants better, it enhanced the financing flexibility and achieve financing more effective, therefore welcomed by the market widely. Geometry is an important branch of mathematics, it uses algebraic methods to study geometric problems, in order to study the relationship between the spatial region, and the geometry has been applied in many fields. This paper mainly introduced the general option pricing theory, the theory of term structure of interest rate, the embedded option pricing process and its geometric theory, and combine the geometric theory and option pricing effectivly, and then gives a new embedded option pricing process.