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Published in:
2023 | OriginalPaper | Chapter
1. Preliminaries
Authors : Rituparna Sen, Sourish Das
Published in: Computational Finance with R
Publisher: Springer Nature Singapore
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Abstract
We start with some preliminaries in computation to introduce the reader to the basic concepts and ideas. The first distinction between theoretical derivations and computation is that in the latter we are seeking a specific numerical solution as opposed to proof of existence. For that purpose we need to have a set of clear instructions that can be followed step by step to arrive at a solution, often an approximate one. Such a set of instructions is called algorithm. The following is an example of an algorithm. Suppose we want to find the median of a set of n numbers, we use the following algorithm. Sort the numbers in order of magnitude. Check if n is odd or even. If n is odd, median is the value at the \((n+1)/2\)-th position. If n is even, median is the average of the values at the n/2-th and \(n/2+1\)-th positions.