dS/S=dlnS, what's going on?

larsh0303 · February 3rd, 2006, 10:44 pm

Yeah yeah. I know how the algebra works. dlnS/dS = 1/S, so dS/s = dlnS. Perfect!!However, if today t = 1, yesterday t = 0. S(0) = 10, S(1) = 20. => dS / S = 100%HoweverdlnS = ln2 = 0.69. What is going on!!!???

twofish · February 3rd, 2006, 11:00 pm

S is changing so you can't just take the S at t=0at t=0 dS/S is going to work out be be 1. at t=1 it is going to be 0.5. So you'd expect the calcuated value of dlnS to be somewhere in the middle which is where it is.

vplanas · February 4th, 2006, 7:36 am

, but .An increment of 100% cannot be ocnsidered an infinitesimal anymore.victor.

ppauper · February 4th, 2006, 1:21 pm

ln(S+dS)-ln(S)=ln((S+dS)/S)=ln(1+dS/S)~dS/Sso (change in ln S) = (change in S)/S