Nonlinear Differential Equations in Preventing Financial Risks

Abstract

Abstract The nonlinear differential equation option pricing formula is invaluable in financial derivatives investment risk assessment. This article applies the theory of nonlinear differential equations to deal with financial risks in commodity and currency markets. Through this condition, we obtain the fair price process of contingent rights under the classic Black-Scholes model and the price process of the optimal growth investment strategy. The results show that the risk measurement under stable distribution is suitable for investors to manage risk.