Financial Mathematics

The one-period model of the binomial model (-> simplist "toy" model)

The multi-period model

Let's think about the modern probability theory($\\approx$ measure theory).A sample space $\\Omega$ is a collection of all possible outcomes. and a su

1. Stochastic process (1) Stochastic process For a probability space $(\Omega, \mathcal{F}, P)$, A stochastic process $\{Xt\}{t\in[0,T]}$ is a paramet

$X(t) =$ the position of the particle at time $t$.$\\mu(t,x) =$ drift term $=$ the velocity of the particle when it is located at $x$ at time $t$.$\\D