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2 Economics b) Suppose that the dynamic of an asset (V) is governed by the following diffusion: dVt = K(0 - Vt )dt + ov,3/2dw,,
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Economics b) Suppose that the dynamic of an asset (V) is governed by the following diffusion: dVt = K(0 - Vt )dt + ov,3/2dw,, where K, 0 and o are constants and Wt is a Wiener process. Apply Ito's lemma to derive the stochastic process followed by G = In VtStep by Step Solution
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