Exercise 1.12 Suppose that the variable x = x(t, z) at time t satisfies where (dz) 2
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Exercise 1.12 Suppose that the variable x = x(t, z) at time t satisfies
where (dz)2 = dt. Applying Ito’s formula (Theorem 1.1), prove that
Hint: Let f(t, x) = log x.
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