The SDE for log-price in the AL model Now use Ito's lemma (2) and Eqs.(3) and (4) to compute the SDE for variable y t = log S t K y t =log K S t . You should get one of the formulas given below (where a = + 2 / 2 a=+ 2 /2). Select the correct answer: 10 points d y t = n E 2 y t a 1 / 2 e y + a 2 2 d t + d W t dy t = 2 nE 1/2 y t a e 2 2 y+a dt+dW t d y t = n E 2 y t + a 3 / 2 e ( y a ) 2 2 2 d t + d W t dy t = 2 nE 3/2 y t +a e 2 2 (ya) 2 dt+dW t d y t = n E 2 y t a 1 / 2 e ( y + a ) 2 2 2 d t + d W t dy t = 2 nE 1/2 y t a e 2 2 (y+a) 2 dt+dW t d y t = n E 2 y t a 3 / 2 e ( y + a ) 2 2 2 d t + d W t dy t = 2 nE 3/2 y t a e 2 2 (y+a) 2 dt+dW t 4. Question 4 Problem 4: Stock pinning in the AL model