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Reference.org
Constant elasticity of variance model
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<p>In <a href="/facts/Mathematical_finance/P9otEltQ">mathematical finance</a>, the CEV or constant elasticity of <a href="/facts/Variance/ULBJKXD1">variance</a> model is a <a href="/facts/Stochastic_volatility/d5zBCcUP">stochastic volatility</a> model, although technically it would be classed more precisely as a <a href="/facts/Local_volatility/mQDXH8T3">local volatility</a> model, that attempts to capture stochastic volatility and the <a href="/facts/Leverage_effect/aLNbPlPP">leverage effect</a>. The model is widely used by practitioners in the financial industry, especially for modelling <a href="/facts/Equities/Qa912YwX">equities</a> and <a href="/facts/Commodities/zD0Em9v7">commodities</a>. It was developed by <a href="/facts/John_Carrington_Cox/HEPeTSpt">John Cox</a> in 1975. </p>