Assessing Asset Value Changes Using a System of Stochastic Models with Constant Terms and Periodic Drift Coefficients

Abstract

The Stochastic Differential Equation (SDE) is a well-known mathematical tool used for estimating asset values over time. This paper focuses on stochastic systems with an emphasis on variations in stock parameters. The problems were solved analytically using Itô's method, providing precise measures for assessing asset values. The study empirically analyzes the behavior of asset values under increasing volatility, presenting results in tables and graphs. Key findings include: increased volatility decreases asset values, periodic parameters cause fluctuations in asset assessments, and the average asset value over time impacts financial markets in time-varying investments. This work introduces a novel approach by modeling stock drift coefficients with constants and periodic event parameters, offering unique insights for financial market investors.