Abstract We study finite-maturity American equity options in a stochastic mean-reverting diffusive interest rate framework. allow for non-zero correlation between the innovations driving price and rate. Importantly, we also to assume negative values, which is case some investment grade government bonds Europe recent years. In this setting focus on call put characterize analytically their two-di...

This paper starts with the observation that pure time preference theory leads to conflicting views concerning effect of changes in productivity on rate interest. Subsequently, it reviews parts interest literature and concludes does not qualify as a praxeological theory. Then, combines Hülsmann’s subjectivist capital Lachmann Kirzner provides explains The key is cost reduction through use fixed ...