Mathematics

Stochastic Differential Equations are equations with a random term in them
Partial Differential Equations are equations that have more than one independent variable
Ordinary Differential Equations are equations that have only one independent variable


a + b 2

Generally the longer the time that the money is tied up, the higher the rate of interest, although this is not always the case.
The offsetting of risk by buying other related contracts is called hedging
All the prices are determined by the laws of supply and demand. If there are more sellers than buyers the price will go down. If there are more buyers than sellers then the price will go up
Buyers are referred to as having long positions; sellers are referred to as having short positions


One advantage that makes Equities attractive is the potential for making very large gains
One disadvantage of owning equities is that shareholders are last to be paid if the company gets itself into trouble
If a company did not generate enough cash flow to service all its debts, preference share holders are paid before normal shareholders
Investors buy preference shares because they offer a "higher" steady income
The larger the underlying share price the larger the changes
Every company has a maximum number of shares that it can create. This is referred to as the number of shares that are "authorised"
Investors that borrow money to buy stock may be asked to make a "margin call" (i.e. to deposit additional collateral) if the value of the stock drops substantially
Shorting a stock is considered to be riskier than buying a stock. Since there is no limit on how high the value of the stock can go.


A monopoly is a situation where only one company exists or is a dominant position in that market.
A cartel is a situation where all the companies in that market agree to charge the same prices instead of competing against each other.
The liquidity is the measurement of how easy it is to buy and sell the shares.
Almost all returns are expressed gross (before tax) to allow for easy comparison.




Heath-Jarrow Morton Framework
Stochastic Processes
Black Scholes Option Pricing Model


Brownian Motion - a random process that is normally distributed with a mean of zero


Concavity of the log function


Book
Mathematics of Derivative Securities - Cambridge Uni Press


Monte Carlo Simulation is a method of random sampling, and non recombining trees are representations of how a value evolves in which branches don't connect at future nodes.


Fubinis theorem - indicates when the order of integrals can be changed to derive the main result.


khanacademy.org


Algebra

Algebra is the language of calculus
You cannot do calculus without algebra




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