Stochastic investment model

A stochastic investment model is an approach used in finance and economics to account for uncertainty and randomness in the investment process. Unlike deterministic models, which assume that future outcomes can be predicted with certainty given a specific set of initial conditions, stochastic models incorporate variability and randomness in various factors that affect investment performance. ### Key Features of Stochastic Investment Models: 1. **Random Variables**: Stochastic models often use random variables to represent uncertain outcomes, such as stock prices, interest rates, and economic indicators.