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Research Proposal Title: Option Pricing Models Introduction The Black-Scholes model and the Cox, Ross and Rubinstein binomial model are the primary pricing models in the modern financial market. Both models are based on the same theoretical foundations and assumptions (such as the geometric Brownian motion theory of stock price behavior and risk-neutral valuation). Meanwhile, these option pricing techniques are often considered among the most mathematically complex of all applied areas of finance. Financial analysts have reached the point where they are able to calculate, with alarming accuracy, the value of a stock option. By comparisons, most of the models and techniques employeed by today's analysts are rooted in a model developed by Fischer Black and Myron Scholes in 1973. Hence, the research emphasis is put on the Black-Scholes model, especially its implementation in China Financial Market. Research Objectives 1. To examine the function of the Black-Scholes model in modern financial market. 2. To develop the...

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