On the Mathematics And Economic Assumptions of Continuous Time Models

Cover On the Mathematics And Economic Assumptions of Continuous Time Models
On the Mathematics And Economic Assumptions of Continuous Time Models
Robert C Merton
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4), a is 0(1). Because r > and a and u are both 0(1), there exists a solution h^ > for every 6 > 0.
Therefore, for all h can be written as - 33 - (48) EjleCk)!^} = ^iPJ^l'' -, /„m, (N-2)r. +l\ . .^ /ex = OfE^ h J j, from equation (5) = o(h) for N > 2, because r > 0. Thus all the absolute moments of e(k) higher than the second are asymptotically insignificant by comparison with the first two moments.


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