Financial Mathematics
Explore time and risk models; arbitrage and discrete pricing; continuous models and limits. Concepts and connections are available independently of video coverage.
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Black–Scholes model
Option pricing follows a diffusion market with restrictive volatility, trading and friction assumptions.
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Geometric Brownian motion
A multiplicative stochastic differential model keeps positive initial asset prices positive.
Value at Risk
VaR is a loss quantile at a stated horizon and confidence level, not a maximum possible loss.
Binomial pricing models
Up-and-down price moves support backward valuation under no-arbitrage assumptions.
Compound interest
Interest accrues on both principal and previously accumulated interest.
Mean–variance optimization
Expected return and covariance describe a constrained portfolio optimization model.
Knowledge connections
- Geometric Brownian motion · Related · Map context
- Value at Risk · Related · Map context