Science fair questions related to Brownian Motion and Black Scholes Equation?

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  • #1
courtrigrad
1,236
2
Hello

I am competing in a regional science fair on MArch 17. Currently I have done research on put and call options, brownian motion etc... I was wondering if you guys have any ideas of good science fair questions (Scientific Method) that can be clearly explained. Earlier, someone told me that I could do something in Brownian Motion. I was focusing on Black Scholes Equation.

Any ideas are appreciated :smile:
 
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  • #2
any ideas?
 
  • #3
courtrigrad said:
I was focusing on Black Scholes Equation.

There you go.
 

Related to Science fair questions related to Brownian Motion and Black Scholes Equation?

1. What is Brownian Motion and how is it related to the Black Scholes Equation?

Brownian Motion is the random motion of particles in a fluid due to collisions with other particles. It is related to the Black Scholes Equation because it is used to model the movement of stock prices in financial markets, which is similar to the movement of particles in a fluid.

2. How does the Black Scholes Equation work?

The Black Scholes Equation is a mathematical model that calculates the theoretical value of European-style stock options. It takes into account factors such as the current stock price, the strike price, the time until expiration, and the volatility of the stock.

3. What is the significance of Brownian Motion and the Black Scholes Equation in finance?

Brownian Motion and the Black Scholes Equation are important tools in finance because they help investors and financial institutions make informed decisions about buying and selling stock options. These models allow for the prediction of future stock prices, which is crucial in managing investment portfolios.

4. How is the accuracy of the Black Scholes Equation tested?

The accuracy of the Black Scholes Equation is tested by comparing its predicted values to actual market prices. If there is a significant difference between the two, adjustments can be made to improve the model's accuracy.

5. Can the Black Scholes Equation be applied to other financial instruments besides stock options?

Yes, the Black Scholes Equation can also be applied to other financial instruments such as currencies, commodities, and interest rates. However, adjustments may need to be made to account for different factors that affect these instruments.

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