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Python for Finance

You're reading from   Python for Finance If your interest is finance and trading, then using Python to build a financial calculator makes absolute sense. As does this book which is a hands-on guide covering everything from option theory to time series.

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Product type Paperback
Published in Apr 2014
Publisher
ISBN-13 9781783284375
Length 408 pages
Edition 1st Edition
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Author (1):
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Yuxing Yan Yuxing Yan
Author Profile Icon Yuxing Yan
Yuxing Yan
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Table of Contents (14) Chapters Close

Preface 1. Introduction and Installation of Python FREE CHAPTER 2. Using Python as an Ordinary Calculator 3. Using Python as a Financial Calculator 4. 13 Lines of Python to Price a Call Option 5. Introduction to Modules 6. Introduction to NumPy and SciPy 7. Visual Finance via Matplotlib 8. Statistical Analysis of Time Series 9. The Black-Scholes-Merton Option Model 10. Python Loops and Implied Volatility 11. Monte Carlo Simulation and Options 12. Volatility Measures and GARCH Index

Generating our own module

The math module has more than two dozen functions, such as the pow(), sin(), and ceil() functions. It is definitely a good idea to have just one program or file or package or module to include all of them. Let's start from the simplest case of two functions. The first function is the pv_f() function we discussed before. Our second function is the present value of perpetuity, which has constant cash flow at the same interval forever. If the first cash flow occurs at the end of the first period, we have the following formula:

Generating our own module

Here, c is the constant periodic cash flow occurring at the end of each period, and R is the periodic discount rate. For example, if we are expected to receive $10 at the end of each year forever, and the first cash flow would happen at the end of the first year, then the present value of such a perpetuity is $100 (10 / 0.1) if the annual discount rate is 10 percent.

Again, we need to navigate to File | (Choose) A new Window (Ctrl+N), and...

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