<t>Of course, any product (or basket of goods) you might use to calculate purchasing power will only serve as an approximation. PPP is only one aspect anyway (and it's a long-term thing). Interest rates, capital flows and balance of payments are just as important to consider.Your "theory" is connect...

<t>Think about the purchasing power of one unit of currency vs the PP of another currency, not about the relative amounts of cash in circulation. (After all, if the population of country A is X times as large as the population of country B, it would only be logical that there is more cash of currenc...

In WoQF 2nd ed. on page 518 (One-factor IR modeling: Vasicek), shouldn't it be[$]B(\tau)=\frac{1}{\gamma}(e^{-\gamma\tau}-1)[$]instead of [$]B(\tau)=\frac{1}{\gamma}(1-e^{-\gamma\tau})[$] ?Thanks!

Thanks for your helpful reply! I understand that differentiation now.

<t>In a recent lecture on derivatives pricing, we used Laplace transform for determining the value function of a forward contract.Our lecturer said the initial condition was [$]V(S,T-t=0)=S[$]. To be honest, I don't understand why that would be. After all, forward contracts are not marked to market ...

There must be something I'm missing or maybe I just don't understand the question: If by luck I pick two balls that have different weights, I instantly find the lighter ball. Hence the minimum number of times I must use the weighing scale is 1.

<t>Hi everyone! This is my first post on the Wilmott forum. I thought I should bring this thread back to life, because I'm not quite satisfied with the solution presented here. I solved the problem the same way you did and I came up with the same formula. However, I doubt that it is well-defined.N=[...