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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff947f14c-7f23-43a5-bcf8-dbada2e40763%2Fdfa39eb7-4e82-4811-8575-ba766e405898%2F4nrw5wn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1
rAS – rV +ro²s² + 0 = 0
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