Fairmat is a free-of-charge multi-platform software that allows to model financial contracts (e.g. a derivative contract) or projects with many contingencies (e.g. a Real Options

Real options analysis

Real options valuation, also often termed Real options analysis, applies option valuation techniques to capital budgeting decisions. A real option itself, is the right — but not the obligation — to undertake some business decision; typically the option to make, abandon, expand, or contract a...

 model) by decomposing it into basic parts. Complex structures and dependencies are modeled using a graphical interface. Virtually any payoff function can be written using a simple algebraic language.

Fairmat is available for Linux

Linux

Linux is a Unix-like computer operating system assembled under the model of free and open source software development and distribution. The defining component of any Linux system is the Linux kernel, an operating system kernel first released October 5, 1991 by Linus Torvalds...

, Microsoft Windows

Microsoft Windows

Microsoft Windows is a series of operating systems produced by Microsoft.Microsoft introduced an operating environment named Windows on November 20, 1985 as an add-on to MS-DOS in response to the growing interest in graphical user interfaces . Microsoft Windows came to dominate the world's personal...

 and Mac OS X

Mac OS X

Mac OS X is a series of Unix-based operating systems and graphical user interfaces developed, marketed, and sold by Apple Inc. Since 2002, has been included with all new Macintosh computer systems...

.

Features

• Fairmat provides a high level of abstraction and allows users to price and perform analysis for new derivative contracts or project by modeling it with a bottom-up procedure, with no knowledge of programming languages. The generated models can then be solved by using Monte Carlo simulation
  Monte Carlo methods in finance
  Monte Carlo methods are used in finance and mathematical finance to value and analyze instruments, portfolios and investments by simulating the various sources of uncertainty affecting their value, and then determining their average value over the range of resultant outcomes. This is usually done...
  
   , binomial trees
  Binomial options pricing model
  In finance, the binomial options pricing model provides a generalizable numerical method for the valuation of options. The binomial model was first proposed by Cox, Ross and Rubinstein in 1979. Essentially, the model uses a “discrete-time” model of the varying price over time of the underlying...
  
   or closed form procedures (e.g the black model
  Black model
  The Black model is a variant of the Black–Scholes option pricing model. Its primary applications are for pricing bond options, interest rate caps / floors, and swaptions...
  
  ).
• The information about the structure of every project model is contained in an xml file and can be exchanged with third parties.
• Fairmat's capabilities can be extended and specialized by plug-ins using the Mono.addins extensibility model.