Mathematical Principles and Quantitative Finance · 29. septembre 2024

Topology, from Greek "topos" (place) and "logos" (study), explores connections within spaces, focusing on structure over distance. In quantitative finance, topology is crucial for derivatives pricing, ensuring stable models and smooth price changes. It supports the convergence of models like binomial trees and Monte Carlo simulations, enhancing accuracy. A key principle in finance is the absence of arbitrage – no risk-free profit.