Stochastic Calculus and Some Applications to Finance

Abstract

In this research we discuss some models and develop the stochastic calculus and some application to finance. By using the stochastic processes and as applications, we present Poisson process and Wiener process which used for modeling Brownian motion. Also we discuss Ito’s integrals and formulas, we used stochastic integration techniques. Also we discuss some examples to find mean and variance from the stochastic differential equations.