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by benny
November 5th, 2001, 8:25 am
Forum: Student Forum
Topic: Derivatives, the theory and practice...: did someone spot the mistake page 295 ?
Replies: 2
Views: 191191

Derivatives, the theory and practice...: did someone spot the mistake page 295 ?

<t>Hi.It seems to me there's a mistake in the implied risk-neutral probability density function (in terms of implied vol.) formula page 295 of DERIVATIVES: the exponent should be -0.5*d2^2 and not d1^2 (otherwise in the case sigmaimp=const we do not come back to the usual lognormal probability densi...