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In quantum mechanics, the expectation value is the probabilistic expected value of the result (measurement) of an experiment. It can be thought of as an average of all the possible outcomes of a measurement as weighted by their likelihood, and as such it is not the most probable value of a measurement; indeed the expectation value may have zero probability of occurring (e.g. measurements which ...
This is heavily used in the pricing of financial derivatives due to the fundamental theorem of asset pricing, which implies that in a complete market, a derivative's price is the discounted expected value of the future payoff under the unique risk-neutral measure. [1] Such a measure exists if and only if the market is arbitrage-free.
This provides us with a method for calculating the expected values of many microscopic quantities. We add the quantity artificially to the microstate energies (or, in the language of quantum mechanics, to the Hamiltonian), calculate the new partition function and expected value, and then set λ to zero in the final expression.
The Ehrenfest theorem, named after Austrian theoretical physicist Paul Ehrenfest, relates the time derivative of the expectation values of the position and momentum operators x and p to the expectation value of the force = ′ on a massive particle moving in a scalar potential (), [1]
at option maturity, value is based on moneyness for all nodes in that time-step; at earlier nodes, value is a function of the expected value of the option at the nodes in the later time step, discounted at the short-rate of the current node; where non-European value is the greater of this and the exercise value given the corresponding bond value.
For a scalar random variable X the characteristic function is defined as the expected value of e itX, where i is the imaginary unit, and t ∈ R is the argument of the characteristic function:
Indeed, the expected value [] is not defined for any positive value of the argument , since the defining integral diverges. The characteristic function E [ e i t X ] {\displaystyle \operatorname {E} [e^{itX}]} is defined for real values of t , but is not defined for any complex value of t that has a negative imaginary part, and hence ...
The expectation value of the total Hamiltonian H (including the term V ee) in the state described by ψ 0 will be an upper bound for its ground state energy. V ee is −5 E 1 /2 = 34 eV , so H is 8 E 1 − 5 E 1 /2 = −75 eV .