<p>6. Continuous-Time Models and Their Applications<br/>6.1 Options, 222<br/>6.2 Some Continuous-Time Stochastic Processes, 222<br/>6.3 Ito’s Lemma, 226<br/>6.4 Distributions of Stock Prices and Log Returns, 231<br/>6.5 Derivation of Black–Scholes Differential Equation, 232</p><p>6.6 Black–Scholes Pricing Formulas, 234<br/>6.7 An Extension of Ito’s Lemma, 240<br/>6.8 Stochastic Integral, 242<br/>6.9 Jump Diffusion Models, 244<br/>6.10 Estimation of Continuous-Time Models, 251</p><br/>