The LIBOR Market Model and its Application in the SAFEXJIBAR Market: We construct and implement LIBOR and Swaptions market mode,Used

The LIBOR Market Model and its Application in the SAFEXJIBAR Market: We construct and implement LIBOR and Swaptions market mode,Used

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The main objective of this work is to construct and implement a LIBOR market model and a Swaptions market model for the South African market.In his Thesis, Victor Gumbo starts by recapitulating the basic theory of arbitrage pricing, forward measures and term structure models for zerocoupon bonds. He goes on to describe and analyze the LIBOR market models. Apart from the standard models, he goes on to discusses market practice and provides numerous formulae for pricing as well as terminal measure existence. In Chapter 3, he gives a similar outline for Swap Market models. It should be emphasized that these models are quite complicated from a theoretical point of view but Victor manages to give an extremely pedagical account of this difficult theory.

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