General Pricing Model Of Derivative Security And It's Application

Derivative security is a kind of security which value is based on the other underlying securities. The basic pricing principle is to construct a composition which includes the other securities besides this derivate and bears no risk in balance market. Then the balance price of this composition will be forcasted. The way of construction and the pricing partial differential equation are different between including changeable underlying and not including.In this paper , a general pricing model based on some changeable underlying is posed using stochastic process and array analysys etc. It not only contains usual pricing models of derivative and the deriving process of pricing will be simplified , but also distincts the changeable underlying's effect to pricing equation.But the limit of the basic assumptions and the value of parameters deviating from the fact in pricing equation will cause pricing error. How to release the restrains and choose a better way of deciding parameters for a model closer to reality are worth being put forward.