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Asset Price Model

Gringo_Bandito

Joined
2/18/17
Messages
1
Points
11
For small values δ > 0, and fixed constants a, b ∈ R, we have a new asset price modeled byM(t + δ) = M(t) (1 + N(aδ^p, b^2 δ^q)) Assume that M(0) = 1, and find the formula for M(T) in each of the following four cases:

(a) p = q = 1 (b) q > p = 1 (c) p > q = 1 (d) p > 1 and q > 1
 
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