Stochastic Calculus
Stochastic Calculus is a branch of mathematics that deals with processes that involve randomness or uncertainty. It extends traditional calculus to include functions that are influenced by random variables, making it useful for modeling systems that evolve over time in unpredictable ways, such as financial markets or natural phenomena.
One of the key components of stochastic calculus is the Itô integral, which allows for the integration of stochastic processes. This framework is essential in fields like finance, where it helps in pricing options and managing risk, as well as in engineering and physics for analyzing systems affected by noise.