Hi All,
I am trying to understand the derivation bnehind the BS from a lognormal random walk, however, in the notes i have it just seems to suddenly replace (dX)^2 with dt.
Following another textbook, I see the same derivation, but no explanation? I know it is probably me being incompoetent, but why is it true that we can do this?
Derivation shown at the link above.