Discuss at least 5 examples of negative externalities.

Discuss examples of positive externalities.

What are the advantages of regulations and fines?

What are the disadvantages of regulation and fines?

(5 points) Let W(r ) be a standard Wiener process. Also let / and g be two square integrable adapted processes such that the two Ito integrals [ f (u) dw (u) and 18 (u) dw (u) are well-defined. (a) (1.5 points) Apply Ito's isometry to prove that E [ ([' s ( ) aw (u) (['s (u) aw (u))] = =['s(4)8(u)du]. Now, denote X (1) = [ sen(W (s))dw (s), where sen(*)=_1 /fx