Jump Diffusion
Also called: merton-jump-diffusion, poisson-and-compound-poisson
A pricing model that adds sudden jumps to the smooth wandering of Brownian motion — capturing crashes and gap moves that a pure diffusion misses. Better fat tails, at the cost of more complexity.
Where this is taught
Definitions are the trailer. These free levels turn Jump Diffusion into something you play — one bite-size lesson, with worked examples, a quiz and XP.