A Two Model Approach of Assessing Asset Value Functions for Capital Investments

Abstract

The benefit of monetary assets cannot be over emphasized because it stands as an engine room to every investment which accumulates wealth such as daily, weekly, monthly and yearly etc. In this study, a closed form solution of Stochastic Differential Equation (SDE) was successfully exploited for the analysis of asset values and other stock market quantities. The solutions of stock variables were critically observed by simulations which describe the behavior of asset values with respect to their maturity periods. Finally, the skewness and kurtosis of the asset values were obtained to give investors proper directions in terms of decision making.