This course introduces some of the discrete and continuous probability distributionsĀ most commonly used to describe the behavior of random variables.
- Discrete and continuous random variables
- Probability distribution function and cumulative distribution function
- Discrete uniform and binomial distribution functions
- Using binomial trees to describe stock price movement
- Tracking error
- Continuous uniform distribution
- Normal distribution
- Univariate and multi-variate distributions
- Standard normal distribution
- Short-fall risk and safety-first ratio
- Normal vs. lognormal distribution
- Discrete and continuously compounded rates of return
- Monte Carlo simulation and historical simulation