Hello, I'm just unsure how to find the answer for the red box. Thank you
(1 pt) Let f (t, r) be a smooth function of variables t and r, and let Wt be a Wiener process. According to lto calculus (1) (dW)2 -di (2) dt dW, = 0 (3) (dt)20 The goal is to find a formula for df for f (t, Wt). which will be a version of Ito's Lemma Taylor expansion of f about (t, r) gives 5fxX Use subscript notation for partial derivatives: typeas ftx. ator Replacing with Wt. At with dt and Ar with dWt gives 5ftt Use subscript notation for partials: type fr.(r, Wt) as just fxx. Now using (1)-(3) and neglecting higher order terms, equation (5) reduces to (6) df- 1-fx