I didn't become interested in derivatives until 1982, 1983.

We concluded that you cannot rely on delta hedging alone. It sounds simplistic to say that now, but back then, this was the sort of thing people were only just beginning to realize.

Yes, our tree has an interesting shape. The center branches reflect the shape of the zero curve. When extreme parts of the tree are reached the branching pattern changes to accommodate the mean reversion.

Our starting point then was trying to find a way to incorporate mean reversion into the HoLee model.

Briefly speaking, our conclusion is that stochastic volatility does not make a huge difference as far as the pricing is concerned if you get the average volatility right. It makes a big difference as far as hedging is concerned.

The HoLee model was the first term structure model. I remember reading their paper soon after it was published and as it was fairly different from many of the other papers that I had read, I had to read it quite a few times. I realized that it was a really important paper.

I didn't become interested in derivatives until 1982, 1983.

I think VAR is a very healthy development within the industry.

Alan White and I spent the next two or three years working together on this. We developed what is known a stochastic volatility model. This is a model where the volatility as well as the underlying asset price moves around in an unpredictable way.

The real challenge was to model all the interest rates simultaneously, so you could value something that depended not only on the three-month interest rate, but on other interest rates as well.

Our research led on to other things, such as the fact that exchange rates are not lognormally distributed.

In the interest rate area, traders have for a long time used a version of what is known as Black's model for European bond options; another version of the same model for caps and floors; and yet another version of the same model for European swap options.

If each of your time steps is one week long, you are not modeling the stock price terribly well over a one-week time period, because you are saying that there are only two possible outcomes.

I guess any simple idea that is really good will catch on quickly.

We started giving presentations at practitioner conferences in 1986, and since then all of our derivatives research has been stimulated by contact with practitioners.

The problem with interest rates are that you are not modeling a single number, you are modeling a whole term structure, so it is a sort of different type of problem.

There are challenges in terms of the measurement of VAR for what are known as nonlinear derivatives, where things like gamma and vega are important dimensions of the risk.

Our tree is actually a tree of the short-term interest rate. The average direction in which the short-term interest rate moves depends on the level of the rate. When the rate is very high, that direction is downward; when the rate is very low, it is upward.

One important measurement issue concerns the fat tails problem that I mentioned earlier. VAR is concerned with extreme outcomes. If the tails of the probability distributions we are using are too thin, our VAR measures are likely to be too low.

When interest rates are high you want the average direction in which interest rates are moving to be downward; when interest rates are low you want the average direction to be upward.

Appetite, craving for food, is a constant and powerful stimulator of the gastric glands.

For to be poised against fatality, to meet adverse conditions gracefully, is more than simple endurance; it is an act of aggression, a positive triumph.

Forget it enough to get over it and remember it enough so it doesnt happen again.

Feed the dogs. I hate to hear them barking like that.

The 14th Amendment was recognized right away to be problematic. The concept of person was both too narrow and too broad, and the courts went to work to overcome both of those flaws.

I have never been given to envy - save for the envy I feel toward those people who have the ability to make a marriage work and endure happily.

There is no love of life without despair of life.

The study of tavern history often brings to light much evidence of sad domestic changes. Many a cherished and beautiful home, rich in annals of family prosperity and private hospitality, ended its days as a tavern.

I just wanna learn and I wanna grow. I wanna consume as much information as possible. I wanna be great.

We're trying to have the band create something beautiful that hopefully one day, 20 years from now, can be picked up by a kid and hopefully have the same effect that Neil Young had on me, or Led Zeppelin or Black Sabbath.

There is a very good chance I could have been a screw-up for the rest of my life.

There's nothing sexy about Orange County.

Take advantage of every opportunity to practice your communication skills so that when important occasions arise, you will have the gift, the style, the sharpness, the clarity, and the emotions to affect other people.

I want to become a very good writer.

I've got to make sure Corey Clark is all right.

At this point, I don't get hired a lot because people don't think I could finance a movie.

I'm such a geek, and have always been a real nerd.

You can give without loving but you can never love without giving.

A symphony is no joke.

It is ironic that American women now need to be fortified by the inspiration of the women of the Arab Spring, who risked so much to win basic human rights.

I have no trouble with my enemies. I can take care of my enemies in a fight. But my friends, my goddamned friends, they're the ones who keep me walking the floor at nights!

I spent ten years playing classical piano, and that was what led to keyboards and eventually to production and to Linkin Park.

Running for office was definitely something I've thought about. When I was younger, I wanted to major in political science. And I've been engaged in current events since I was a kid. If I can make a difference and feel passionately and capable, then I would. Why not?

There have been reports of many child marriages taking place in the Malabar region in Kerala, especially among the Muslim community. However, under Muslim Personal Law, a girl can be married once she attains puberty, and hence we cannot say that such marriages are not valid.