Stochastic Risk Model: a Computing Method for Ruin Problems

As the tool to predict the collapse in terms of finance of a company, the probability of ruin plays a crucial role. The interest rate, initial compounding assets, together with ruin time, ruin function will be discussed for the new directions of observing the chance of being collapsed of the company. As the interest rate becomes larger, the observation is the probability of ruin will be smaller. Random walk, Brownian motion and the connection with Capital Asset Pricing Model also will be addressed. The models can assist decision makers or investors to make decision to choose between insurance and investment risk.