Track: Financial Engineering

Abstract

Stochastic rules and their inequality are very useful tools in various economic fields and financial problems. The purpose of this paper is to determine the main results obtained from the use of stochastic rules on financial optimization. Emphasis is placed on demand problems and the effects of changes in portfolio selection problems. Some other examples are not directly related to the optimization problem, this is given to show a broad view on the application of stochastic rules in financial matters. Stochastic orders and their inequalities have been used in various fields on problems related to opportunities (probability) and statistics in general. The purpose of this paper is to introduce stochastic rules on economic problems, namely more specifically on the problem of demand and the problem of the effects of changes in portfolio selection. The next section discusses the problem of formal portfolio selection, demand problems, and their comparative applications regarding market equilibrium price systems.