Black Scholes Model
An interesting article on the Black Scholes Model and its foibles.
Some timeless quips from Buffet and Munger Link:
Mr. Buffett on the use of higher-order math in finance: “The more symbols they could work into their writing the more they were revered.”
Mr. Munger on the same theme: “Some of the worst business decisions I’ve ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you but it doesn’t. They teach that in business schools because, well, they’ve got to do something. ”
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