Tri-Diagonal Preconditioner for Toeplitz Systems from Finance

Tri-Diagonal Preconditioner for Toeplitz Systems from Finance

Year:    2011

East Asian Journal on Applied Mathematics, Vol. 1 (2011), Iss. 1 : pp. 82–88

Abstract

We consider a nonsymmetric Toeplitz system which arises in the discretization of a partial integro-differential equation in option pricing problems. The preconditioned conjugate gradient method with a tri-diagonal preconditioner is used to solve this system. Theoretical analysis shows that under certain conditions the tri-diagonal preconditioner leads to a superlinear convergence rate. Numerical results exemplify our theoretical analysis.

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Journal Article Details

Publisher Name:    Global Science Press

Language:    English

DOI:    https://doi.org/10.4208/eajam.260609.190510a

East Asian Journal on Applied Mathematics, Vol. 1 (2011), Iss. 1 : pp. 82–88

Published online:    2011-01

AMS Subject Headings:   

Copyright:    COPYRIGHT: © Global Science Press

Pages:    7

Keywords:    European call option partial integro-differential equation nonsymmetric Toeplitz system normalized preconditioned system (matrix) tri-diagonal preconditioner.