Physical Sciences and Mathematics Commons^™

Black-Scholes Equation And Heat Equation, Charles D. Joyner

Honors College Theses

First, we present and define the Black-Scholes equation which is used to model assets on the stock market. After that, we derive the heat equation that describes how the temperature increases through a homogeneous material. Finally, we detail how the two equations are related. We introduce and relate the Black-Scholes equation and Heat Equation.