why is the range( 1, t_intervals + 1)
In MC: Forecasting Stock Prices, the loop uses for t in range( 1, t_intervals)
However, in MC:Euler Discretization, the loop uses for t in range( 1, t_intervals +1 )
Why do we have to add +1 for Euler and not for Stock Pricing?
It might be a mistake because the size of the array under Euler's method is 25-1 rows * 10000columns
Hi Ryan and Santiago!
Thanks for reaching out.
Please accept my apology for the delayed response.
It is just a matter of representation, nothing really important. It depends how many steps do you want to have randomized.
In the "Stock Prices" lecture, we did not add 1 and we referred to the formulas as shown in the video and in the lecture file. This is why the last iterated stock price is t + 999, which means you will have generated 1,000 steps.
In the "Euler" lecture, we add one, so that you don't obtain just t + 249, but t + 250.
That's all... What is important is to stick either to one or to the other.
Regarding Euler, we use t_intervals = 250 , and later we use Z = np.random.standard_normal((t_intervals + 1, iterations)) .
Please don't confuse this with obtaining 251L as a length of the S matrix.
Hope this helps.
Kind regards,
Martin