Geometric Brownian motion Geometric Brownian motion A geometric Brownian motion (GBM) (also known as exponential Brownian motion) is a continuous-time stochastic process in which the logarithm of the randomly varying quantity follows a Brownian motion (also called a Wiener process) with drift. It is an important example of stochastic processes satisfying a stochastic differential equation (SDE); in particular, it is used in mathematical finance to model stock prices in the Black–Scholes model. A stochastic process "S" is said to follow a GBM if it satisfies the following stochastic differential equation (SDE): where formula_2 is a Wiener process or Brownian motion, and formula_3 ('the
Brownian motion stars by where formula_36 is the mass of the background stars. The gravitational force from the massive object causes nearby stars to move faster than they otherwise would, increasing both formula_34 and "V". The Brownian velocity of Sgr A*, the supermassive black hole at the center of the Milky Way galaxy, is predicted from this formula to be less than 1 km "s". In mathematics, Brownian motion is described by the Wiener process; a continuous-time stochastic process named in honor of Norbert Wiener. It is one of the best known Lévy processes (càdlàg stochastic processes with stationary independent increments) and