# Question: The formula for an infinitely lived call is given in

The formula for an infinitely lived call is given in equation (12.18). Suppose that S follows equation (20.20), with α replaced by r, and that E* (dV ) = rV dt. Use Itˆo’s Lemma to verify that the value of the call, V (S), satisfies this equation: 12σ2S2VSS + (r − δ)SVS − rV = 0

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