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.

## Resources

- Slides (.html)