Abstract
This chapter discusses computational methods for approximating portfolio and asset pricing problems. Formulation of these problems is usually specified along with components, preferences, payoffs, etc., that are analytic functions. This implies that the solutions to these problems acquire this property, so that these solutions can be accurately approximated by polynomials within a specified region. It is also possible to obtain a uniform upper bound for the approximation error within a subset of this region. Sections 2 and 3 address each problem in discrete time, while Sections 4 and 5 examine these problems in continuous time.
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