### Financial processes

(Lajos Vágó, 2019)
Pricing European call and put options in the binomial model

Changing measures for random variables, examples

Ito's formula

Modeling stock price with geometric Brownian motion

Black-Scholes-Merton theorem

Price of a forward contract, put-call parity

Martingale processes under the risk-neutral measure, risk-neutral pricing formula

Connection between the risk-neutral measure and arbitrage opportunities

T-forward measure

Zero coupon bonds, forward prices under the forward measure

Instantaneous forward rate, its evolution under the HJM model

Forward LIBOR

**Literature:**
Steven Shreve: Stochastic Calculus for Finance II: Continuous-Time Models