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Black-scholes equation

The model used in the late 80s was the Black-Scholes equation. The equation models the price of options based upon stock price, volatility of the stock, and past performance. It is related to the 4D (3 spatial, 1 time) wave equation by a simple change of variables. A group of investors used it to make approx $1.5 trillion (US dollars). This worked phenomenally well, until the Asian economy started to break down. Unfortunately, they trusted their model to much, and while most of the experts were getting out, they remained in. The organization went bankrupt, shortly thereafter.

16 posts.
Monday 22 April, 08:11
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