This thesis is devoted to use Lie group analysis to obtain all invariant solutions by constructing optimal system of one-dimensional subalgebras of the Lie algebra L5 for a nonlinear wave equation. I will show how the given symmetries ( Eq.2) are admitted by using partial differential equation (Eq.1), In addition to obtain the commutator table by using the same given symmetries. Subsequently, I calculate the transformations of the generators with the Lie algebra L5, which provide the 5-parameter group of linear transformations for the operators. Finally, I construct the invariant solutions for each member of the optimal system.

The main purpose of this thesis is to use modern goal-oriented adaptive methods of Lie group analysis to construct the optimal sys- tem of Black-Scholes equation. We will show in this thesis how to obtain all invariant solutions by constructing what has now become so popular, optimal system of sub-algebras, the main Lie algebra admit- ted by the Black-Scholes equation. First, we obtain the commutator table of already calculated symmetries of the Black-Scholes equation. We then followed with the calculations of transformation of the gen- erators with the Lie algebra L6 which provides one-parameter group of linear transformations for the operators. Here we make use of the method of Lie equations to solve the partial di®erential equations. Next, we consider the construction of optimal systems of the Black- Scholes equation where the method requires a simpli¯cation of a vector to a general form to each of the transformations of the generators. Further, we construct the invariant solutions for each of the op- timal system. This study is motivated by the analysis of Lie groups which is being taken to another level by ALGA here in Blekinge In- stitute Technology, Sweden. We give a practical and in-depth steps and explanation of how to construct the commutator table, the calcu- lation of the transformation of the generators and the construction of the optimal system as well as their invariant solutions. Keywords: Black-Scholes Equation, commutators, commutator table, Lie equa- tions, invariant solution, optimal system, generators, Airy equation, structure constant, / It was an accolade for us to work with Professor Nail.H. Ibrgimov. +46762600953