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Posts under ‘Mathematics’

What is a Martingale Equivalent Measure/Risk Neutral Measure? Is it a condition, probability, discount rate?

Sly Fox X asked: I have been looking at definitions and papers on this and most describe it as a non-arbitrage measure, but how exactly do you concretize this? Most of the explanations are derivations of formulas, but I am hoping to pick-up the concept on more pragmatic terms. Should it be a discount rate [...]

arbitrage problem?

curious45 asked: i know its a simple math problem, but it seems i cant get it right, so i need your help and tell me the exact formula (step by step) (in between) to get it… the answer by the way is 2, i just want to know how u get this figure… question: assume [...]