Jan 01

Intro to Quant: What’s a random variable? (7 min tutorial)

by David Harper, CFA, FRM, CIPM

FRM |

In the seven minute tutorial below, I introduce the notion of a random variable in quantitative finance. One way to look at this is with a three step process:

  1. We start with something that we would like measure. In my example, it is an asset return. Specifically, Google's daily periodic stock price return
  2. We describe the measure as a random variable. We say, "Google's daily periodic return is a random variable called (X)."
  3. We characterize the random variable with a distribution

distribution_temp

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