Stochastic Models on Variation of Capital Market Prices for Economic Investments: A Comprehensive Study

Nwosu, Godson Loveday and Amadi, Innocent Uchenna
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Nwosu, Godson Loveday: Department of Mathematics/Statistics, Ignatius Ajuru University of Education, Rumuolumeni, Port Harcourt, Nigeria.
Amadi, Innocent Uchenna: Department of Mathematics/Statistics, Captain Elechi Amadi Polytechnic, Rumuola, Port Harcourt, Nigeria.

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Abstract: The study investigated stochastic models of capital market price variation for economic investments. Money is heavily invested in time-varying assets so that the rate of return increases significantly, offsetting any unanticipated costs associated with trading activities. The management of assets and obligations, which are essential instruments for achieving financial autonomy, is where the benefits of financial investments are found. Second-Order Differential System for variations of stock market volatility, equations and other popular models are widely recognized. This study examined mathematical models that could be applied to investment plan decision-making. Stochastic systems were specifically created to take stock market price fluctuations into account. Volatility, strike price, interest rate, asset value, asset maturity time, and growth rate of the underlying asset price were the stochastic factors that were employed. The Laplace transform method, which provided exact conditions to determine the asset price function of independent investors, was used to adopt the analytical answers. Though modified Bessel solutions won't crash, crashes occurred for analytical solutions that used the Bessel function, which led to panic buying and a drop in asset value.

Date: 2025-05-22
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Published in Asian Basic and Applied Research Journal, 2025, 7 (1), pp.358-367. ⟨10.56557/abaarj/2025/v7i1180⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05082924

DOI: 10.56557/abaarj/2025/v7i1180

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