Diffusion Equation
A partial differential equation, used in solving a random walk problem.
Then the Black-Scholes PDE becomes a diffusion equation
The terminal condition C(S,T) = max{S âˆ' K,0} now becomes an initial condition
Using the standard method for solving a diffusion equation we have ...
Telegrapher's Equation A variation of the Diffusion Equation that describes minor differences in the drunkard's walk, in which the random decision controls the change in direction rather than the direction itself.
 See also: Future, Model, Option, Response, Exchange
  
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