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Probability and statistics
The main concepts of probability
The concept of probability distribution
Types of probability distribution
Other probability distributions
INTRODUCTION
As we saw in Chapter 9, pricing derivatives, particularly securities with embedded optionality, requires assumptions on their future behaviour. Whether it is just the range of final values the security is likely to have, the paths it took to get there, or the future behaviour of several variables that impact on the value of derivative, they all require the use of probability and statistics. Hence this chapter is devoted to the main concepts of probability, ...
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