Stochastic calculus for finance i pdf download 2004

The term stochastic is used in many different fields, particularly where stochastic or random processes are used to represent systems or phenomena that seem to change in a random way.

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For a fixed configuration of noise, SDE has a unique solution differentiable with respect to the initial condition. Nontriviality of stochastic case shows up when one tries to average various objects of interest over noise configurations.

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