Financial modeling with heavy-tailed stable distributions

The aim of this article was to give an accessible introduction to stable distributions for financial modeling. There is a real need to use better models for financial returns because the normal (or bell curve/Gaussian) model does not capture the large fluctuations seen in real assets. Stable laws are a class of heavy-tailed probability distributions that can model large fluctuations and allow more general dependence structures. (C) 2013 Wiley Periodicals, Inc.