A type of mathematical formula that models continuous, random movement ('continuous' means that the intervals between movements are infinitely small – in other words, there is no "jumping" from one interval to the next; it is a smooth transition). This includes the This type of formula is valued because it calculates expected returns independently of stock price (meaning that historic price levels have no effect on future outcomes), and does not produce negative values (which is important because stock prices cannot be negative). Its shortcomings are that it does not account for the nature of (the change in the variation of volatility), nor can it anticipate