BlackScholes on 17bII+, accurate to 5th decimal place  Printable Version + HP Forums (https://archived.hpcalc.org/museumforum) + Forum: HP Museum Forums (https://archived.hpcalc.org/museumforum/forum1.html) + Forum: Old HP Forum Archives (https://archived.hpcalc.org/museumforum/forum2.html) + Thread: BlackScholes on 17bII+, accurate to 5th decimal place (/thread67692.html) 
BlackScholes on 17bII+, accurate to 5th decimal place  Bob Wang  01132005 Thanks to Tony Hutchins for the idea of using an intermediate variable and nesting divisions. This BlackScholes formula relies on a 5th order polynomial approximation. The worst case scenario, given below, is till accurate to 5 decimal places. Enter PS, PE, RF%, S, T, then "MORE", then "SOLVE", then "CALLV", and if needed, "PUTV" I had stopped working on this, waiting for the new 17bII+ ROM. But now that we know L() and G() don't work, I decided I should post this for anyone who wants a relatively accurate and fast BlackScholes. I'll post another VERY accurate version using Taylor series, as suggested by Tizedes Csaba. But that version is VERY VERY SLOW. Takes over a minute to execute.
PS=68 Re: BlackScholes on 17bII+, accurate to 5th decimal place  Eddie Shore  01142005 Thanks, Bob.
I wonder if HP let out L and G, in the first 17 batch so maybe to "match" the solver in the 49 series?
Re: BlackScholes on 17bII+, accurate to 5th decimal place  Dave Shaffer (Arizona)  01142005 Let me be a bit of an iconoclast: I'm no expert on BlackScholes (or any other formulae which purport to calculate the future value of investments), but it seems to me that no matter what you calculate, the actual results of an investment depend on the truelife variability of the market  which can not be modelled all that accurately! I therefore doubt that even 5digit precision is necessary in such calculations.
It's like my physics students who continually provide 10 digit "answers" (because that's what the calculator reports) to problems with only one or two significant figures!
Re: BlackScholes on 17bII+, accurate to 5th decimal place  Wayne Brown  01142005 Quote: That's one of the nice things about slide rules; it's pretty hard to learn to use one properly without also learning the importance of significant digits, and the difference between precision and accuracy. It's also pretty hard to come up with a 10digit answer! (Well, at least without "cheating" and using a book of log tables. :)
I remember my own physics teacher, back in 1973, giving us the "precision vs. accuracy" lecture when one of those newfangled calculators had the temerity to show up in her classroom...
Re: BlackScholes on 17bII+, accurate to 5th decimal place  Bob Wang  01142005 Dave: These formulae are not intended for real world use. Think of them as "proof of concept" exercises. Just as I am amazed by Hutchins, Derenzo and Carr, I hope SOMEBODY, besides myself, finds these formulae interesting ;) Bob
P.S. *IF* HP financial calculators had UTPN, BlackScholes could be implemented to the limit of machine accuracy. However, such an exercise would also be trivial and uninteresting.
