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horacioaliaga
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relativity theory in mathematical finance

August 2nd, 2007, 5:26 pm

Relative value,A couple of twins are born. One is put in a spaceship (A) and launched to travel across an inflationless universe. The other one (B) stays on planet earth under inflationary conditions. After 20 years, they are asked to go buy a $ 100 gift for their mother (M), who stayed all the time on earth. Then they are all reunited and M is asked about the perceived value of the gifts. M comments that A's gift seems to be cheaper than B's, the result seems to be proportional to the CPI indices difference.Next to come: quantum gravity theory in mathematical finance
 
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Traden4Alpha
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relativity theory in mathematical finance

August 2nd, 2007, 8:19 pm

QuoteOriginally posted by: outrunI'm not going to read the upcoming quantum post, I sure its going to prettier in an un-observed state. I'm looking forward to the quantum post because I want to know whether Schrodinger's cat bond defaults or not.
 
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MCarreira
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relativity theory in mathematical finance

August 2nd, 2007, 9:03 pm

QuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: outrunI'm not going to read the upcoming quantum post, I sure its going to prettier in an un-observed state. I'm looking forward to the quantum post because I want to know whether Schrodinger's cat bond defaults or not. It could be said that some AAA CDOs can "tunnel" to default ... and classical finance would predict that this would be impossible ...
 
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quantmeh
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relativity theory in mathematical finance

August 3rd, 2007, 1:58 am

equatorial countries are moving faster so they should have less inflation, which is not true. therefore i declare relativistic finance is wrong.
 
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Maelo
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relativity theory in mathematical finance

August 3rd, 2007, 8:54 am

QuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: outrunI'm not going to read the upcoming quantum post, I sure its going to prettier in an un-observed state. I'm looking forward to the quantum post because I want to know whether Schrodinger's cat bond defaults or not. You cannot know whether the cat default or not until the due date is over (under the assumption that payment is due without requirement..if payment requires creditor to ask for it....then, you do not know until the cerditor aks for it.!! Meanwhile all you have is a mixture of states ranging from default, infinite possible partial paymenst and, of course, full payment (maybe also include some "overpayment" and even full retirement of debt!!! as well)....uhmmm!!!yummy
 
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McKinnell
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relativity theory in mathematical finance

August 3rd, 2007, 9:22 am

This is utter rubbish
 
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sunmaker
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relativity theory in mathematical finance

August 9th, 2007, 7:38 am

QuoteOriginally posted by: jawabeanequatorial countries are moving faster so they should have less inflation, which is not true. therefore i declare relativistic finance is wrong.Ah, but this is more than offset by the smaller gravitational redshift at the equator due to the earth's oblateness..
 
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wilbat
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relativity theory in mathematical finance

August 10th, 2007, 6:49 pm

In "Space-time Finance - The Relativity Theory’s Implications for Mathematical Finance" by Espen Gaarder Haug, the final statement is: "Even quantitative finance can not escape the fundamental laws of physics".(Special) Relativity Theory is, of course, interesting - and the General Theory is highly complex.But please don't forget Newton laws of motion. Quite often they are sufficient - since not all objects on earth move at 70% times the speed of light.-- Allan
 
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TraderJoe
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relativity theory in mathematical finance

August 13th, 2007, 1:27 am

I just wasted nine seconds of my life reading Espen's Article in Wilmott magazine.He did once predict the current subprime market meltdown though
 
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rcohen
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relativity theory in mathematical finance

August 15th, 2007, 8:36 am

On page 10 of the paper (middle column), Espen Haug uses relativistic time dilation to compare the elapsed time of 50 years on earth to 1 year on the space station. He then applies no-arbitrage principles and concludes that the annual rate of return on the space station should be 11,639% as opposed to 10% on earth. What he fails to consider, however, is that the economy on the space station would progress only one year, whereas it would progress 50 years on earth. Because of this, therefore, his application of "no arbitrage" across moving frames of reference, which forms the basis of his paper, would not be valid.
 
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Collector
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relativity theory in mathematical finance

August 15th, 2007, 2:30 pm

Ruben not sure I understand you, but my example was based on that the money was invested on earth while you slowed your "age" at the black-hole space-station (high gravity enviroment) before returning to earth (see bottom of mid column page 10 "Assuming next that we place cash at earth with 10% annual return"). In other words I did not apply no-arbitrage principle here, that would involve everyone wanted to move to space-station for a while, while their investment on earth was growing fast (relative to time on space-station), but then production would fall on earth (people moving out) until we got equilibrium and no-arbitrag (based on certain assumptions). Yes if invested in economy at space-station you would be righ, but that was not case in this example and was reason for arbitrage opportunity. Did you as TraderJoe only spent 9 seconds on the article ? For more simplified example see here: (destruction should naturally be distortion, his accent (the man behind Einstein's voice supposedly also played in sopranos)Black-Hole Hedge Fund
Last edited by Collector on August 14th, 2007, 10:00 pm, edited 1 time in total.
 
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TraderJoe
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relativity theory in mathematical finance

August 16th, 2007, 12:42 am

QuoteOriginally posted by: CollectorBlack-Hole Hedge FundSomeone's got waaaaaaaaaaaaaayyyyyyyyyyyyyyyyyy too much time here.
Last edited by TraderJoe on August 15th, 2007, 10:00 pm, edited 1 time in total.
 
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TraderJoe
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relativity theory in mathematical finance

August 18th, 2007, 12:15 am

QuoteOriginally posted by: outrunQuoteSomeone's got waaaaaaaaaaaaaayyyyyyyyyyyyyyyyyy too much time here.can you write down a little synopsis for me then?Why? Are too lazy ?