When Dealing with a Stochastic Process What Do We Mean

question 10

Essay

When dealing with a stochastic process what do we mean by a 'drift'?

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Definitions:

Compounded Semi-annually

The process where interest is added to the principal sum of an investment or loan twice a year, resulting in interest earning interest.

Third Payment

This refers to the third installment of a series of payments toward a financial obligation.

Loan

Borrowed capital which is due to be paid back with interest.

Payments

Transactions made to fulfill obligations, such as bills, loans, or purchases.