Pricing a stochastic car value depreciation deal


  • This work was supported by Kuwait University Research Grant No. (SM04/11).


This paper deals with pricing a contract under which a dealer buys back a car from a client, for a cash amount contained in a given depreciation table. The value of the car is supposed to depreciate according to a stochastic model with random repairs modeled by a Poisson process. Copyright © 2013 John Wiley & Sons, Ltd.