Abstract

The aim of this work is to tackle the three–dimensional (3D) Heston– Cox–Ingersoll–Ross (HCIR) time–dependent partial differential equation (PDE) computationally by employing a non–uniform discretization and gathering the finite difference (FD) weighting coe cients into differentiation matrices. In fact, a non–uniform discretization of the 3D computational domain is employed to achieve the second–order of accuracy for all the spatial variables. It is contributed that under what conditions the proposed procedure is stable. This stability bound is novel in literature for solving this model. Several financial experiments are worked out along with computation of the hedging quantities Delta and Gamma.

Details

Title
On an improved computational solution for the 3D HCIR PDE in finance
Author
Soleymani, Fazlollah 1 ; Akgül, Ali 2 ; Esra Karatas Akgül 3 

 Department of Mathematics, Institute for Advanced Studies in Basic Sciences (IASBS), Zanjan 45137–66731, Iran. [email protected] 
 Department of Mathematics, Art and Science Faculty, Siirt University, Siirt, Turkey. [email protected] 
 Department of Mathematics, Faculty of Education, Siirt University, Siirt, Turkey 
Pages
207-230
Publication year
2019
Publication date
2019
Publisher
De Gruyter Poland
ISSN
12241784
e-ISSN
18440835
Source type
Scholarly Journal
Language of publication
Romanian; Moldavian; Moldovan; English
ProQuest document ID
3155486889
Copyright
© 2019. This work is published under http://creativecommons.org/licenses/by-nc-nd/3.0 (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.