References:
In the early days of modern finance, volatility was often treated as a static input—a number plugged into the Black-Scholes equation to derive a price. However, the market crashes of 1987, 2008, and the erratic behaviors seen during the COVID-19 pandemic taught quants a harsh lesson: volatility is not constant. It is dynamic, clustering, and often unpredictable. References: In the early days of modern finance,
Valuation tools are used to estimate the value of financial instruments, such as options, futures, and stocks. The book covers various valuation tools, including the Black-Scholes model, the binomial model, and the finite difference method. These tools are used to estimate the value of financial instruments and to analyze the sensitivity of their prices to changes in market conditions. the market crashes of 1987