Risk-Neutral Measure

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August 31, 2024 4 min read Definitions
Martingale Measure: Probability Measure for Discounted Price Processes
Finance Economics Probability Measure Risk-Neutral Measure Financial Mathematics Derivatives Pricing Martingales
The Martingale Measure, also known as the Risk-Neutral Measure, is a probability measure under which the discounted price processes of financial assets are martingales. This concept is central to modern financial mathematics, particularly in the pricing of derivatives.
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