Mathematical Finance
Theory, Modeling, Implementation
Chapter One
Introduction
1.1 Theory, Modeling, and Implementation
This book tries to give a balanced representation of the theoretical foundations of
mathematical finance, especially derivative pricing, state-of-the-art models, which are
actually used in practice, and their implementation.
In practice, none of the three aspects-theory, modeling, and implementation-can
be considered alone. Knowledge of the theory is worthless if it isn't applied.
Theory provides the tools for consistent of modeling. A model without implementation
is essentially worthless. Good implementation requires a deep understanding of the
model and the underlying theory.
With this in mind, the book tries to build a bridge from academia to practice and
from theory to object-oriented implementation.
1.2 Interest Rate Models and Interest Rate
Derivatives
The text concentrates on the modeling of interest rates as stochastic (undetermined)
quantities and the evaluation of interest of rate der ... read full excerpt from Mathematical Finance: Theory, Modeling, Implementation ebook
