Explain the tool of Discretization methods

Question

Explain the tool of Discretization methods in Quantitative Finance.

Answer 1

Discretization methods: The complement to simulation methods, and there are several types of such. The best identified are the finite-difference methods which are discretizations of continuous models that Black–Scholes. Depending upon the problem you are solving, and unless it’s extremely simple, you will probably descend the simulation or finite-difference routes for your crunching number.