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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Time value of money
Discounting compares amounts at different dates under a specified rate model.
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Brownian motion
Brownian motion has continuous paths and independent Gaussian increments with variance equal to elapsed time.
Compound interest
Interest accrues on both principal and previously accumulated interest.
Mean–variance optimization
Expected return and covariance describe a constrained portfolio optimization model.
No-arbitrage
A market model excludes zero-cost trades with nonnegative and sometimes positive payoff.
Binomial pricing models
Up-and-down price moves support backward valuation under no-arbitrage assumptions.
Knowledge connections
- Compound interest · Related · Map context
- Mean–variance optimization · Related · Map context
- Brownian motion · Related · Map context
- No-arbitrage · Related · Map context