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F-divergence minimal martingale measures andoptimal portfolios for exponential Levy models with a change-point

 

When 16.15 on Thursday 10th March 2011
Where NAB 1.07,New Academic Building 
Presentations  
Speaker Lioudmila Vostrikova
From Université d'Angers
Abstract

We study exponential Levy models with change-point which is a random variable, independent from initial Levy processes. On canonical space with initially enlarged ltration we describe all equivalent martingale measures for change-point model and we give the conditions for the existence of f-minimal equivalent martingale measure. Using the connection between utility maximisation and f-divergence minimisation, we obtain a general formula for optimal strategy inchange-point case for initially enlarged ltration and also for progressively en-larged ltration when the utility is exponential. We illustrate our results consid-ering the Black-Scholes model with change-point.

For further information Sabina Allam (Postgraduate Administrator) Ext. 6879
Department of Statistics, Columbia House
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