Looking into the asset price model and after taking logs and solving the expectation of this model I am wondering what the higher order terms would look like?
Here Yi ~ N(0,1) and E[Yi^2] < infinity
Var [μδt + σ[sqrt(δt)] Yi - 1/2(σ)^2 δt (Yi)^2] =
(σ)^2 δt + “higher order terms”
How do I solve for these higher order terms? What should they look like? (is it something to do with Taylor’s series?)