Risk-neutral Valuation: Traded Securities

This lecture covers risk-neutral valuation in the context of traded securities, focusing on the evolution of ex-dividend prices, martingale representation, examples of Q-martingales, derivatives, hedging strategies, completeness of markets, and the second Fundamental Theorem of Asset Pricing. It also delves into bond pricing models, such as the Vasicek model, PDE formulation, pricing of cash flows, Gordon growth assumptions, coupon bonds, forward and futures contracts, and the construction of futures prices. The lecture concludes with a proof related to the risk-neutral pricing framework.