Evaluation of callable bonds: finite difference methods, stability and accuracy

Article Abstract:

Callable bonds refer to straight bonds that allow debtors to buy back or 'call' the bond based on a fixed amount, call price, accrued interest and call date over the instrument's life. Finite difference techniques are applied to evaluate the American, European and semi-American bonds. A numerical error phenomenon is generated by the discontinuity of redemption values. The selected finite difference technique conditioned bond price numerical accuracy. Finally, the boundary method exhibited inverse effects for straight and callable bonds.

Research, Bonds, Bonds (Securities), Bond repurchasing

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The borrower's curse: optimism, finance and entrepreneurship

Article Abstract:

The high failure probability of new small scale entrepreneurs is mainly caused by their unreasonable optimism and gambling attitudes. These types of entrepreneurs often rely on bank loans instead of maximizing their available resources by self-financing. Banks, which are well informed and prudent business entities, reduce potential optimistic entrants by restricting credit lines. The model used differs from previous learning models which consider unbiased initial expectations.

Management, Evaluation, Economic aspects, Businessmen, Entrepreneurship, Attitudes, Attitude (Psychology), Bank loans

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Circumventing the curse of dimensionality in applied work using computer intensive methods

Article Abstract:

Estimation of Multinomial Choice Models (EMCM) software has been developed as an aid to the analysis of multivariate probability simulation. The software carries both logit and probit applications in flexible discrete choice modeling for applied workers. The product's capacity for simulation-based inference eliminates estimation problems for model development, selection and performance.

Economics, Information management, Multivariate analysis, Consumer preferences

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