Summary It has been proposed that the arbitrage possibility in the fractional Black–Scholes model depends on the definition of the stochastic integral. More precisely, if one uses the Wick–Itô–Skorohod integral one obtains an arbitrage-free model. However, this integral does not allow...

A generalized bridge is the law of a stochastic process that is conditioned on N linear functionals of its path. We consider two types of representations of such bridges: orthogonal and canonical. The orthogonal representation is constructed from the entire path of the underlying process. Thus,...