1 rAS – rV +-To²s2 + 0 = 0

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The Black-Scholes partial differential equation (PDE) for a European option is given by(as image show):

 

Show how to derive this PDE in the CAPM framework.

1
rAS – rV +ro²s² + 0 = 0
Transcribed Image Text:1 rAS – rV +ro²s² + 0 = 0
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