In this paper, we implement a stochastic deflator with four economic and financial risk factors: interest rates,  stock prices, default intensities, and convenience yields. We examine the deflator with different financial assets, such as stocks, zero-coupon bonds, vanilla options, and corporate coupon bonds  . Our numerical results show the reliability of the deflator approach in pricing financial derivatives.
In this paper, we implement a stochastic deflator with five economic and financial risk factors: interest rates, market price of risk, stock prices, default intensities, and convenience yields. We examine the deflator with different financial assets, such as stocks, zero-coupon bonds, vanilla options, and corporate coupon bonds . We find required regularity conditions to implement our stochastic deflator . Our numerical results show the reliability of the deflator approach in pricing financial derivatives.
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four
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market price of risk,
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. We find required regularity conditions to implement our stochastic deflator