I am a quantitative finance student, and during the first year of this Master’s Degree I couldn’t help but notice that there’s a lot of focus on derivatives pricing and little or none on stock pricing.
Shouldn’t stock pricing be important, for example to help determine a fair value?
I think the comment provided by nbbo2 answers your question fairly well and is pointing in the right direction. To make the answer more concrete, it's important to note that unlike with other types of assets, derivative prices in the Black-Scholes world are driven mainly by changes in the price of the underlying. This means that the randomness of the underlying asset (described by the typical Bro…
