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Probability Theory and Modern Finance

October 18-19, 2000

Toronto, ON, Canada

Mathematics

Host: Fields Institute
Homepage: http://www.fields.utoronto.ca/finance_course.html
Email: finance_course@fields.utoronto.ca

Description:
Why do option prices depend on volatility but not on expected returnsNULL What is the difference between a Stochastic and a Deterministic integral and why does it require new techniquesNULL How can you determine whether theoretical arbitrage opportunities are presentNULL Why is Brownian motion the basic mathematical object on which much of modern financial theory is basedNULL What are Martingales and how do they relate to security pricesNULL How does Ito's Lemma let one calculate expected values for functions of Brownian motion? What is Girsanov?s theorem and why is it so important? How does one distinguish between real-world and risk-neutral probabilities? What concepts lie behind the Black-Scholes/Merton formula? What economic intuition does the model provide?

Speakers: Thomas S. Salisbury, Moshe Arye Milevsky

Date received: September 05, 2000


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