easy · Quantitative Finance stochastic
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 toward its long-run mean level given enough time.
- The process must be a martingale under the risk-neutral pricing measure at every date.
- The process must be continuous and differentiable everywhere, ruling out any jump components.
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