What is Girsanov’s Theorem and its importants
What is Girsanov’s Theorem and Why is it Important in Finance?
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Girsanov’s theorem is the formal model underlying the modification of measure by the real world to the risk-neutral world. So, we can change from a Brownian motion along with one drift to a Brownian motion with the other.
What is Grossman–Stiglitz paradox says?
Define the stochastic differential equation with an expression?
What are the characteristics of calibration?
Explain the cash budget and the capital budget relation to pro forma financial statements.
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What is mathematical definition of risk in form of semi-variance?
Illustrates an example of Arbitrage?
What are Finite-difference methods?
What is the significance of the term additional funds needed?
Where can we get incomplete markets?
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