Ito’s Lemma is a classical result in mathematical/quantitative finance that is related to stochastic processes.
It can be presented in a technical way, e.g., in a PhD programme in mathematics, or in a far-less technical manner, e.g., in a Master programme in finance.
Here, we adopt the latter approach and implement it as STACK-type question for Moodle.
The main STACK question covering Ito’s Lemma is long (it contains 14 answer-boxes) and uses randomization (w.r.t. functional form and symbols).
Randomization is also used with warm-up questions, but these questions are short; they deal with partial derivatives and help the learner to identify terms in a given stochastic differential equation.
The sequence of STACK questions allows the student to digest Ito’s Lemma in a game-like manner and alleviates teacher’s burden related to assessment - it’s good for everybody.
- Slides (.html)