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The Risk-Neutral Probabilities for an Asset, with a Current Value

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The risk-neutral probabilities for an asset, with a current value equal to the present value of future payoffs are:


Definitions:

Systematic Desensitization

A behavioral therapy technique used to reduce phobias through gradual exposure to the feared object or situation combined with relaxation exercises.

Free Association

A psychoanalytic technique in which clients are encouraged to express any thoughts that come to mind without censorship or filtering.

Repression

A defense mechanism where uncomfortable thoughts, feelings, or desires are unconsciously pushed out of conscious awareness.

Suppression

The deliberate, or conscious, placing of certain ideas, impulses, or images out of awareness.

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