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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Replicating portfolios
A trading strategy replicates a claim when its terminal payoff matches the claim under the model.
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Binomial pricing models
Up-and-down price moves support backward valuation under no-arbitrage assumptions.
No-arbitrage
A market model excludes zero-cost trades with nonnegative and sometimes positive payoff.
Black–Scholes model
Option pricing follows a diffusion market with restrictive volatility, trading and friction assumptions.
Compound interest
Interest accrues on both principal and previously accumulated interest.
Geometric Brownian motion
A multiplicative stochastic differential model keeps positive initial asset prices positive.
Knowledge connections
- No-arbitrage · Related · Map context
- Binomial pricing models · Related · Map context
- No-arbitrage · Prerequisite · Map context