Economic theorems are fundamental propositions or principles in economics that are derived from a set of assumptions and are supported by logical reasoning or empirical evidence. These theorems provide insights into how economic agents behave, how markets function, and how various economic phenomena are interrelated.

The Almost Ideal Demand System (AIDS) is a model used in economics to analyze consumer demand for goods and services. It was introduced by economists Angus Deaton and John Muellbauer in 1980. The AIDS model is particularly valued for its flexibility and ability to approximate a wide range of demand systems while maintaining desirable properties such as adding up, homogeneity, and symmetry.

The elasticity of a function measures how sensitive the output of that function is to changes in its input. In economics, for instance, elasticity is commonly used to assess how quantity demanded or supplied responds to changes in price. Mathematically, the elasticity \(E\) of a function \(f(x)\) with respect to \(x\) is defined as the percentage change in the output \(f(x)\) divided by the percentage change in the input \(x\).

The Maximum Theorem is a concept in mathematical optimization and economic theory that relates to the conditions under which certain types of maximum or minimum values occur. While the term can have different meanings in different contexts, it is most commonly associated with the study of utility functions in economics and the optimization of functions under certain constraints. In the context of economics, the Maximum Theorem often refers to results concerning the maximization of utility by consumers or firms.

The St. Petersburg paradox is a famous problem in probability theory and decision theory that highlights the conflict between expected value and practical decision-making. It was formulated by Daniel Bernoulli in 1738. The setup of the paradox is as follows: A player participates in a game where a fair coin is flipped repeatedly until it lands on heads. The pot starts at $2 and doubles with each flip of tails.

Adjusted current yield is a financial metric used to assess the yield of a bond or fixed-income investment, taking into account certain adjustments beyond the standard current yield. The current yield is calculated as the annual coupon payment divided by the current market price of the bond.

An admissible trading strategy refers to a trading approach that meets specific criteria or conditions defined by a given financial model or regulatory framework. The term is commonly used in the context of finance, particularly in relation to optimal portfolio management and risk management. Key characteristics of admissible trading strategies include: 1. **Feasibility**: The strategy must be implementable under the constraints of the market, such as liquidity, transaction costs, and other trading limitations.

In finance, "alpha" refers to a measure of an investment's performance on a risk-adjusted basis. Specifically, it represents the excess return of an investment relative to the return of a benchmark index or risk-free rate, taking into account the level of risk associated with that investment. Alpha is often used in the context of portfolio management and hedge funds to evaluate the skill of fund managers.

Gene Transfer Format (GTF) is a file format used for storing information about gene structure and annotations. It is commonly used in bioinformatics, particularly in the context of representing genomic annotations for genes, transcripts, and other features. GTF is often seen in conjunction with the Gene Expression Omnibus (GEO) and is especially related to the analysis of RNA-Seq data. A GTF file consists of a series of lines, each representing a different feature of a genome.

The Cheyette model is a theoretical framework used in the field of economics, particularly in the study of financial markets. It focuses on the dynamics of asset pricing and market behavior in the presence of information asymmetry and behavioral factors. Developed by economist Cheyette, the model incorporates elements of rational expectations and examines how information is disseminated among market participants, influencing their decisions and the overall market equilibrium.

Good-deal bounds are a concept in financial economics, particularly in the context of pricing and arbitrage bounds for derivatives and financial instruments. The main idea behind good-deal bounds is to establish a range of prices for an asset that reflects a balance between two competing elements: the desire to avoid arbitrage opportunities and the willingness to accept potential mispricings due to risk preferences.

Finite difference methods (FDM) are numerical techniques used to solve partial differential equations (PDEs) that arise in various fields, particularly in financial mathematics for option pricing. These methods are particularly useful for pricing options when the underlying asset follows a stochastic process governed by a PDE, such as the Black-Scholes equation. ### Overview of Finite Difference Methods Finite difference methods involve discretizing a continuous domain into a grid (or lattice), allowing the approximation of derivatives using finite differences.

The implied repo rate is a financial metric used to indicate the cost of financing a position with a security, typically in the context of futures contracts or options. It is derived from the difference between the spot price of the underlying asset and its futures price, taking into account the time until the contract's expiration.

Incomplete markets refer to a situation in an economy where not all risks can be completely insured or traded. In an incomplete market, individuals or entities do not have the opportunity to make transactions for every possible future state of the world, meaning that certain risks remain unhedged. This can lead to suboptimal consumption and investment decisions, as agents may not be able to fully insure against potential adverse outcomes.

Jamshidian's trick is a mathematical technique used primarily in the field of finance, particularly in the area of option pricing and the valuation of derivative securities. The trick simplifies the process of pricing certain types of options by transforming the problem into one that can be solved using standard tools like the risk-neutral pricing framework. The main idea behind Jamshidian's trick involves decomposing the pricing of a particular derivative into a series of simpler components that can be analyzed separately.

The Lattice model in finance refers to a method of pricing options and other derivatives using a discrete-time framework that represents the underlying asset's price dynamics as a lattice or tree. The most commonly known form of this model is the Binomial Lattice Model. ### Key Features of a Lattice Model: 1. **Discrete Time**: The model works over discrete time intervals, where asset prices can change at each time step.

Marginal conditional stochastic dominance is a concept used in decision theory and economics, particularly in the context of choices involving risk and uncertainty. It extends the idea of stochastic dominance, which is a method used to compare different probability distributions to determine which one is preferred by a decision-maker under certain conditions.

Margrabe's formula is used in finance to determine the value of the option to exchange one asset for another. Specifically, it is used for options on two different assets that are correlated, typically in the context of currencies or commodities. The formula provides a way to calculate the price of a European-style exchange option, which gives the holder the right, but not the obligation, to exchange one underlying asset for another at a specified future date.

Profit at Risk (PaR) is a financial metric used to assess the potential risk to a company's profits from various adverse market conditions or operational factors. It is similar in concept to Value at Risk (VaR), which focuses on the potential loss in the value of an investment or portfolio over a specified time period, but PaR specifically targets the impact on profits rather than on asset values.

Returns-based style analysis (RBSA) is a quantitative method used to evaluate the investment style and risk exposures of a portfolio, typically employed in the context of mutual funds or investment portfolios. It analyzes the historical returns of a fund to identify its underlying investment strategy and the factors that drive its performance. Key aspects of Returns-based style analysis include: 1. **Regression Analysis**: RBSA typically uses regression techniques to relate the returns of the portfolio to the returns of various benchmark indexes or factors.