4. The No Arbitrage Principle (and the Risk-Free Rate)

In this video, we set the stage for the statistical paradigm we will use to model stocks, which will eventually culminate in the Black-Scholes formula (a tool used to value call options). We here discuss the risk free rate and the concept of 'arbitrage'.
You can read more about Black Scholes in this chapter:
bookdown.org/p...
Stephen Blyth's book on Quantitative Finance was instrumental in working through the proofs in this series:
books.google.c...
#finance #statistics #probability #blackscholes #calloptions #stocks #stochasticprocesses #strike #exerciseoption #money #arbitrage #risk #riskfreerate #borrow #lend #stock

[@random1-c4y]

I am a Student at Stevens doing my Msc in Fin Eng, this is a great video, thank you. I love the fact that you kept the concept at the forefront and used the maths as a supplement

[@chessability.]

Thank you! Appreciate you watching!

[@rockyluo3973]

Very clear explanation!! keep up your great work

[@chessability.]

Thanks Rocky Luo!

[@AkashVerma]

Great video man.

[@chessability.]

Thanks Akash!

[@raaifriz3333]

Nice explanation!

[@chessability.]

Thanks Raaif! Appreciate you watching

[@nyselmech]

aaaha now i get it, thank you

[@chessability.]

Awesome!

[@nyselmech]

​@@chessability. do you have any idea to how to prove rigorously

[@mukulmehar9250]

ohhhhhh, now I get it

[@chessability.]

Great!

[@collecting_data]

04:22 No-Arbitrage Principle
05:45 No-Arbitrage Principle | Example

[@saniasnine]

Sound is very low

[@chessability.]

Thanks for the feedback! Will work on that in a future video.

[@prashantlotankar6804]

It should be d

[@chessability.]

yes good catch!