Explain Boundary/final condition in finite-difference method
Explain the term Boundary/final conditions in finite-difference methods.
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Boundary/final conditions: For a numerical scheme the difference in between a put and a call is in the last condition. You tell the finite-difference scheme how to begin. In finite-difference schemes in finance we begin at expiration and work in the direction of the present. Boundary or final conditions are where we tell the scheme regarding things as knock-out barriers.
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