Explain the tool of Discretization methods
Explain the tool of Discretization methods in Quantitative Finance.
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Discretization methods: The complement to simulation methods, and there are several types of such. The best identified are the finite-difference methods which are discretizations of continuous models that Black–Scholes. Depending upon the problem you are solving, and unless it’s extremely simple, you will probably descend the simulation or finite-difference routes for your crunching number.
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Explain the programme of study of finite differences.
$100 is received at the beginning of year 1, $200 is received at the beginning of year 2, and $300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is ________.
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