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Apr 24

Infographic: Is the Black Scholes Model Responsible for the Credit Crunch

Posted by abiao at 13:57 | Others | Comments(1) | Reads(6547)
There is a large debate on whether we should blame the Black Scholes model for the credit crisis, for example, Guardian publishes an article "The mathematical equation that caused the banks to crash" discussing the issue that the Black-Scholes equation was the mathematical justification for the trading that plunged the world's banks into catastrophe.

Should we? I don't think so, the black scholes is just a weapon, it is the person who use it improperly should be blamed instead. This infographic is a simple defense of the Black Scholes model.
a defense of black scholes model

This is a guest post by Wine Investment


I don't think there is actually anyone arguing this point outside of that article Professor Stewart wrote where he is obviously just wrong.

This infograph seems just plain weird.
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