Assessing Degree of Novelty of Products to Ascertain Innovative Products

Substantial increase in competition compels design firms to develop new products at an increasingly rapid pace. This situation pressurizes engineering teams to develop better products and at the same time develop products faster [1]. Continuous innovation is a key factor to enable a company to generate profit on a continued basis, through the introduction of new products in the market – a prime intention for Product Lifecycle Management. Creativity, affecting a wide spectrum of business portfolios, is regarded as the crucial factor for designing products. A central goal of product development is to create products that are sufficiently novel and useful. This research focuses on the determination of novelty of engineering products. Determination of novelty is important for ascertaining the newness of a product, to decide on the patentability of the design, to compare designers' capability of solving problems and to ascertain the potential market of a product. Few attempts at measuring novelty is available in literature [2, 3, 4], but more in-depth research is required for assessing degree of novelty of products. This research aims to determine the novelty of a product by enabling a person to determine the degree of novelty in a product. A measure of novelty has been developed by which the degree of ''novelty'' of products can be ascertained. An empirical study has been conducted to determine the validity of this method for determining the 'novelty' of the products.

Asymptotic analysis of option pricing in a Markov modulated market

We address asymptotic analysis of option pricing in a regime switching market where the risk free interest rate, growth rate and the volatility of the stocks depend on a finite state Markov chain. We study two variations of the chain namely, when the chain is moving very fast compared to the underlying asset price and when it is moving very slow. Using quadratic hedging and asymptotic expansion, we derive corrections on the locally risk minimizing option price.

Risk Minimizing Option Pricing for a Class of Exotic Options in a Markov-Modulated Market

We address risk minimizing option pricing in a regime switching market where the floating interest rate depends on a finite state Markov process. The growth rate and the volatility of the stock also depend on the Markov process. Using the minimal martingale measure, we show that the locally risk minimizing prices for certain exotic options satisfy a system of Black-Scholes partial differential equations with appropriate boundary conditions. We find the corresponding hedging strategies and the residual risk. We develop suitable numerical methods to compute option prices.