Finite difference methods are numerical techniques used to approximate solutions to differential equations by discretizing them into a set of algebraic equations. This approach replaces derivatives with finite differences, which enables the analysis of problems such as boundary value problems and stochastic processes like jump diffusion. By transforming continuous models into discrete counterparts, finite difference methods provide a practical way to obtain numerical solutions that can be implemented in computational algorithms.
congrats on reading the definition of Finite Difference Methods. now let's actually learn it.