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Mathematical finance

Aka: quantitative finance
Mathematical finance is a field of applied mathematics, concerned with mathematical modeling of financial markets.
Derivative pricing: determine the fair price of a given security in terms of more liquid securities whose price is determined by the law of supply and demand.

ℚ vs ℙ

TODO

In a risk-neutral world, all invested assets (securities) are assumed to earn the same expected rate of return, the risk-free rate, regardless of the risks inherent in the specific invested asset.
The fundamental theorem of arbitrage-free pricing
stochastic calculus
Black-Sholes

See also

Banking
finance

Index

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