Few theories about derivatives
Stochastic ProcessAny variable whose value changes over time in an uncertain way is said to follow a stochastic process. Stochastic processes can be classified as discrete time or continuous time.
A discrete-time stochastic process is one where the value of the variable can change only at certain fixed points in tme, whereas a continuous-time stochastic process is one where changes can take place at any time.
Stochastic processes can also be classified as continuous variable or discdrete variable.
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Exotic Option
Derivatives with more complicated payoffs than the standard European or American calls and puts are sometimes referred to as exotic options.
Most exotic options trade in the over-the-counter market and are designed by financial institutions to meet the requirements of their clients.
From Hull's book 3rd edition
Most exotic options trade in the over-the-counter market and are designed by financial institutions to meet the requirements of their clients.
From Hull's book 3rd edition
posted by yuhu @ 3:59 PM
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