Mathematical finance is a field of applied mathematics that focuses on the mathematical modeling and analysis of financial markets and instruments. It integrates concepts from probability theory, statistics, differential equations, and stochastic calculus to understand and manage financial risks and to price financial derivatives. Key areas of mathematical finance include: 1. **Option Pricing**: Developing models to determine the fair value of options and other derivatives. The Black-Scholes model is one of the most famous examples.
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