INV 201: Risk-neutral pricing and real-world projection answer different questions
A pricing measure and an experience-projection measure have different purposes. A no-arbitrage value should not be interpreted automatically as a real-world expected payoff or forecast.
Original practice scenario
For an original derivative example, label the measure used to value the payoff and the assumptions used to project realised returns. Explain where discounting enters. Keep the intended valuation and forecasting tasks separate rather than swapping probabilities to obtain a preferred number.
Study check
Write the assumptions, the decision being supported and one limitation. Use the current course syllabus for the required terminology and scope; this introductory guide is not a complete course summary.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.