How to Assume Normal Distributions? How to Assume Normal Distributions? – The answer must be ‘it depends.’ It depends on the timeline used to measure returns. Stocks with short timelines,…
What is Grisanov Theorem? Girsanov theorem explains how to shift measurement from the real world to the risk-neutral universe. We can transition from one Brownian motion to another by using…
What is Ito Lemma? Ito lemma is a theorem in stochastic calculus. This means that if you have a random walk in y and a function called f (y, t),…
The Whispering Void