Stochastic volatility is the unpredictable nature of asset price volatility over time. It's a flexible alternative to the Black Scholes' constant volatility assumption.
A single parameter, termed the mixing fraction, is used to calibrate current localstochastic volatility (LSV) models to traded exotic prices as well as vanilla options. This single parameter has been ...
Monte Carlo simulations have become a cornerstone in quantitative finance, particularly in the pricing of complex options and in modelling volatility dynamics. This numerical method employs random ...
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