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Pricing a stochastic car value depreciation deal
Author(s) -
Alshamary Bader,
Calin Ovidiu
Publication year - 2013
Publication title -
applied stochastic models in business and industry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.413
H-Index - 40
eISSN - 1526-4025
pISSN - 1524-1904
DOI - 10.1002/asmb.2001
Subject(s) - depreciation (economics) , cash , value (mathematics) , poisson process , economics , poisson distribution , econometrics , microeconomics , financial economics , finance , mathematics , statistics , profit (economics) , financial capital , capital formation
This paper deals with pricing a contract under which a dealer buys back a car from a client, for a cash amount contained in a given depreciation table. The value of the car is supposed to depreciate according to a stochastic model with random repairs modeled by a Poisson process. Copyright © 2013 John Wiley & Sons, Ltd.