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Application of Martingale Analysis to Optimal Investment and Consumption Strategies
Author: ShaoZhengWei
Tutor: KongFanLiang
School: Harbin University of Science and Technology
Course: Applied Mathematics
Keywords: Martingale analysis Equivalent martingale measure Utility function Optimal Investment and Consumption
CLC: F224
Type: Master's thesis
Year: 2008
Downloads: 189
Quote: 0
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Abstract
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Martingale is a frontier theory of stochastic processes , the martingale analysis method has become a powerful tool , and forward some other branch of mathematics infiltration and cross , and their combination gradually formed a new branch of research . This article is using martingale analysis methods to investigate the optimal investment and consumption decision problem , and get some results . Starting from the microscopic structure of the market and the martingale concept , nature , within the framework of the Black-Scholes study optimal investment and consumption, there are two kinds of financial assets in the financial markets . Using traditional methods - stochastic dynamic programming methods and martingale analysis method to investigate the optimal investment and consumption decisions on the financial markets , there are two kinds of financial assets . Stochastic dynamic programming method to obtain the optimal investment and consumption strategy implicit solution . Martingale analysis method to get the display solution . By the use of the comparison of the two methods , the Martingale analysis has obvious advantages in investment and consumption solve consumption and terminal wealth utility maximization problem . At the same time , the use of equivalent martingale measure principle , the theory of stochastic processes studied recursive utility function under optimal investment and consumption problem . Due to financial asset prices are influenced by many random factors in the company 's profitability indicators , inflation rate , the market factor promoted by deterministic continuous function of time to the random function under circumstances of the random system , the establishment of a mathematical model , that financial asset prices by a new model of random factors , optimal investment and consumption strategy . The martingale analysis, random process theory to find the optimal investment and consumption strategy for the new model . Meanwhile , the basis for decision-making in the utility function is given HARA utility function of the investor 's specific investment and consumption strategies , investment and consumption model has been further improved with practical application significance .
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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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