Wednesday, March 29, 2006

Risk-neutral measure and other such bizzarities..

Risk-neutral measure - Wikipedia, the free encyclopedia

Week 1 found me going through a maze of mathematics (no time for a breather). The three classes I am taking this semester relate to investments, stochastic calculus and econometrics. As ShooGu oberved, there will be a lot of work...

One term we heard a lot of this week was risk-neutral measure and martingales. It can be shown that the existence of a risk-neutral measure implies the AOA (absense of arbitrage) condition.


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