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The exercises in this section prepare the reader for the

The exercises in this section prepare the reader for the next three chapters instead of dealing with the PDEs. An interested reader will find several useful problems in Betounes (1998).

Let Xt be a geometric Wiener process,

Xt = eY,

Where

Yt ≈ N(μt, σ2t).

(a) Consider the definition And the trivaial equality Using these, calculate the expectation:

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