Monday, October 31, 2016

Model Validation Criteria


Let's say I have a brand new fancy model on some asset class (calibration porcedure included over a set of vanilla options) in which I truly believe I made a step forward comparing to existing literature (a phantasmatic situation I recognize).


Which criteria should be in order so I can claim that I am in a position to "validate" this model?


PS: We will assume that the math are OK and that I can prove that there is no bug in the model implementation





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