medium · Quantitative Finance
What is the defining characteristic of an 'Adapted' stochastic process in a filtered probability space?
- The value of the process at time t is known based on the information available at time t.
- The process always reverts to its mean in the long run.
- The process must be a martingale with respect to the risk-neutral measure.
- The process is continuous and differentiable at all times.
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