Fast accurate algorithms for tail conditional expectation

Bryant Chen*, William M Y Hsu, Ming-Yang Kao

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

This paper proposes novel lattice algorithms to compute tail conditional expectation. To improve the naïve approach, we develop tilting, trinomial, and extrapolation algorithms together with some syntheses of these algorithms. Furthermore, we introduce fractional-step lattices to prevent interpolation error in the extrapolation algorithms. A key finding is that combining the techniques of tilting lattice, extrapolation and fractional steps substantially increases speed and accuracy. We demostrate the efficiency and accuracy of these algorithms with numerical results.

Original languageEnglish (US)
Title of host publicationNumerical Analysis and Applied Mathematics - International Conference on Numerical Analysis and Applied Mathematics 2009, ICNAAM-2009
Pages501-504
Number of pages4
DOIs
StatePublished - 2009
EventInternational Conference on Numerical Analysis and Applied Mathematics 2009, ICNAAM-2009 - Rethymno, Crete, Greece
Duration: Sep 18 2009Sep 22 2009

Publication series

NameAIP Conference Proceedings
Volume1168
ISSN (Print)0094-243X
ISSN (Electronic)1551-7616

Other

OtherInternational Conference on Numerical Analysis and Applied Mathematics 2009, ICNAAM-2009
Country/TerritoryGreece
CityRethymno, Crete
Period9/18/099/22/09

Keywords

  • Extrapolation
  • Fractional Steps
  • Lattice
  • Tail Conditional Expectation
  • Value-at-Risk

ASJC Scopus subject areas

  • General Physics and Astronomy

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