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...

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...

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

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...

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

single, equal price per homogeneous good in all locations.[additional citation(s) needed] For further discussion, see Rational pricing. Commodities can...

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...

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

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

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

#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...

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)...

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Quantity theory of money Rate of return pricing – Rational choice theory – Rational expectations – Rational pricing – Reaganomics – Real business-cycle theory...

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

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

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

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

(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...

XVA exposures. Historically, (OTC) derivative pricing has relied on the Black–Scholes risk neutral pricing framework which assumes that funding is available...

The concept of rational expectations was first introduced by John F. Muth in his paper "Rational Expectations and the Theory of Price Movements" published...

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...

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...

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

price index, producer price index, and GDP deflator. price level price point price–specie flow mechanism price war pricing pricing science The application...

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

of arbitrage-free pricing Law of one price Martingale pricing Martingale (probability theory) Mathematical finance Rational pricing Minimal entropy martingale...