Explain lognormal stochastic differential equation
Explain lognormal stochastic differential equation for evolution of an asset.
Expert
One of the beginning points for typical derivatives theory is the lognormal stochastic differential equation for evolution of a certain asset. Itoˆ’s lemma defines the stochastic differential equation for value of an option on such asset. In mathematical terms, when we have a Wiener process X along with increments dX which are normally distributed along with mean zero and variance dt, in that case the increment of a function F(X) is specified by
dF = (dF/dX) dX + ½ (d2F/dX2) dt
It is a very loose dentition of Itˆ o’s lemma but it will suffice.
Below is the amount of rainfall (in cm) every month for the last 3 years in a particular location: 130 172 142 150 144 117 165 182 104 120 190 99 170 205 110 80 196 127 120 175
Explain a rigorous theory for Brownian motion developed by Wiener Norbert.
I need it within 4 hours. Due time March 15, 2014. 3PM Pacific Time. (Los Angeles, CA)
Who developed a rigorous theory for Brownian motion?
A cricketer cn throw a ball to a max horizontl distnce of 100m. If he throws d same ball vertically upwards then the max height upto which he can throw is????
Explain trading of call options.
Prove that Elementary Logic Set is a Model of a Boolean Algebra The three Boolean operations of Logic are the three logical operations of OR ( V ), AN
Where would we be without stochastic or Ito^ calculus?
Prove the law of iterated expectations for continuous random variables. 2. Prove that the bounds in Chebyshev's theorem cannot be improved upon. I.e., provide a distribution that satisfies the bounds exactly for k ≥1, show that it satisfies the bounds exactly, and draw its PDF. T
Terms: Terms are defined inductively by the following clauses. (i) Every individual variable and every individual constant is a term. (Such a term is called atom
18,76,764
1945299 Asked
3,689
Active Tutors
1436088
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!