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2008-05-07

Many words are used frequently by many people such as Kanlee. However, do they  know the exact meanings of them. I doubt.

1  aggregate risk / idiosyncratic risk

2  SDF/pricing kernel/change of measure/state price

3  linear pricing/law of one price

4  complete market                 incomplete market

5  perfect  market                   imperfect market

6  non arbitrage principle

7 dynamic complete           dynamic replicate

8  foundamental theorem in finance

9  arrow-debrue equilibrium           

10 radner     equilibrium

11 put-call   parity

12 black-scholes-merton formula

13 term structure/yield curve

 Enough.

  I don't include anything about Mean-Variance Analysis because it's just a typical example.

7

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