Mathematics, Stochastic Modelling, Quantitative Finance, Finance, Probability.
applied initially, but with the recognition of the special property of Brownian motion: Applying the Rule of Thumb: (𝑑𝑊)²=𝑑𝑡 To adapt the Taylor series for stochastic calculus, we use the fact that (𝑑𝑊)²=𝑑𝑡. This adjustment is necessary to accurately reflect the behavior of Brownian motion. Thus,