TABLE OF CONTENTS Before we consider the mathematics of hypermodels and modelling finance with them, we give in this Chapter a basic review of the concepts, definitions, terminologies and practice in financial markets. No doubt they will be familiar to financial practitioners, but may not be so much for academicians.
An overview and hopefully some feeling about financial market activities are produced in this chapter. Introduction to financial securities such as stocks, bonds, options is given. Together they form the fundamental objects of our study in this volume. Their prices, risks, sensitivity to various parameters pose a complex challenge for mathematical modelling. Although intense research has already been underway for sometime in almost every corner of the globe, the science of financial modelling is still in its infancy to say the least. From this perspective, in order to gain any insights to the problems, it is important for academicians to have a good feel of or even take part in financial activities.
As indicated in the preface, the globalization of the economy and the information technology revolution create new and even democratic opportunity for almost every citizen of the globe to take part in financial markets of some sort: from the accounting office of a giant multinational corporation to the food stall of a small village, activities are intricately linked, with perhaps the exception of those few nations in the world that are isolated (hence immunized) from the rest of the humanity.
With the almost free flow of wealth...
