A quantum mechanical model for the rate of return
In their activity, the traders approximate the rate of return by integer multiples of a minimal one. Therefore, it can be regarded as a quantized variable. On the other hand, there is the impossibility of observing the rate of return and its instantaneous forward time derivative, even if we consider it as a continuous variable. We present a quantum model for the rate of return based on the mathematical formalism used in the case of quantum systems with finite-dimensional Hilbert space. The rate of return is described by a discrete wave function and its time evolution by a Schodinger type equation.
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- Pouria Pedram, 2011. "The minimal length uncertainty and the quantum model for the stock market," Papers 1111.6859, arXiv.org, revised Jan 2012.
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