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"But markets are made of people, who are influenced by events, their
ephemeral feelings about events, and their expectations of
other people’s feelings. The truth is that there are no fundamental laws in finance. And even if there were, there is no way to run repeatable experiments to verify them."

The authors get it.

Lots and lots of Physics envy. So much Physics envy.

Solid introduction to the world of finance

Why Does Risk-Neutral Valuation Work?

All a bank has to do is create subsidiary firms, in a reverse form of the above example, to save regulatory capital.

Before looking at the mathematics of risk we should understand the difference between risk, randomness and uncertainty, all of which are important.