Financial Instability Hypotheses

The Lehman Brothers fall almost caused the global financial system meltdown. For many decades Wall Street was being ruled by the Efficient Market Hypotheses (EMH). Risk management modelling was being done using EMH. These risk management models were underestimating the probability of black swan events. Are financial markets efficient and stable as stipulated by EMH… Continue reading Financial Instability Hypotheses

Expectations & Random Variables For Stock Traders

We are interested in stock prices and their future returns as traders and investors. If you are a stock trader, you would have often come across quantitative trading strategies that use advanced probability theory and stochastic calculus in calculating the stock price volatility. Most of us have no idea how to understand these quantitative trading… Continue reading Expectations & Random Variables For Stock Traders