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  2. Monte Carlo methods for option pricing - Wikipedia

    en.wikipedia.org/wiki/Monte_Carlo_methods_for...

    Since simulation can accommodate complex problems of this sort, it is often used in analysing real options [1] where management's decision at any point is a function of multiple underlying variables. Simulation can similarly be used to value options where the payoff depends on the value of multiple underlying assets [ 8 ] such as a Basket ...

  3. Gillespie algorithm - Wikipedia

    en.wikipedia.org/wiki/Gillespie_algorithm

    In contrast, the Gillespie algorithm allows a discrete and stochastic simulation of a system with few reactants because every reaction is explicitly simulated. A trajectory corresponding to a single Gillespie simulation represents an exact sample from the probability mass function that is the solution of the master equation.

  4. Dynamic simulation - Wikipedia

    en.wikipedia.org/wiki/Dynamic_simulation

    The first applications of computer simulations for dynamic systems was in the aerospace industry. [5] Commercial uses of dynamic simulation are many and range from nuclear power, steam turbines, 6 degrees of freedom vehicle modeling, electric motors, econometric models, biological systems, robot arms, mass-spring-damper systems, hydraulic systems, and drug dose migration through the human body ...

  5. Stochastic simulation - Wikipedia

    en.wikipedia.org/wiki/Stochastic_simulation

    The density function of the t-distribution is given by the following equation: [4] = (+) (+) +, where is the number of degrees of freedom and is the gamma function. For large values of n , the t-distribution doesn't significantly differ from a standard normal distribution .

  6. Duffing equation - Wikipedia

    en.wikipedia.org/wiki/Duffing_equation

    Anyway, using the homotopy analysis method or harmonic balance, one can derive a frequency response equation in the following form: [9] [5] [() + ()] =. For the parameters of the Duffing equation, the above algebraic equation gives the steady state oscillation amplitude z {\displaystyle z} at a given excitation frequency.

  7. Mathematical model - Wikipedia

    en.wikipedia.org/wiki/Mathematical_model

    In a mathematical programming model, if the objective functions and constraints are represented entirely by linear equations, then the model is regarded as a linear model. If one or more of the objective functions or constraints are represented with a nonlinear equation, then the model is known as a nonlinear model.

  8. Simultaneous equations model - Wikipedia

    en.wikipedia.org/wiki/Simultaneous_equations_model

    The simultaneous equation model requires a theory of reciprocal causality that includes special features if the causal effects are to be estimated as simultaneous feedback as opposed to one-sided 'blocks' of an equation where a researcher is interested in the causal effect of X on Y while holding the causal effect of Y on X constant, or when ...

  9. Ornstein–Uhlenbeck process - Wikipedia

    en.wikipedia.org/wiki/Ornstein–Uhlenbeck_process

    For the Wiener process the drift term is constant, whereas for the Ornstein–Uhlenbeck process it is dependent on the current value of the process: if the current value of the process is less than the (long-term) mean, the drift will be positive; if the current value of the process is greater than the (long-term) mean, the drift will be negative.