# Ito's differential in portfolio dynamics

I try to be as concise as possible. Basically I'm following the text "Arbitrage Theory in Continuous Time", by Tomas Bjork.

I put here the point where I'm stuck: Chapter 6 - Portfolio Dynamics.

Where does Equation n. 6.7 come from? I mean, the author probably applies the Ito formula to some function, but actually there are no generalized Ito processes in the discussion in order to justify it.

Any ideas?

Thank you

• It's just the Itô product rule: $\mathrm{d}(X_tY_t)=X_t\mathrm{d}Y_t+Y_t\mathrm{d}X_t+\mathrm{d}X_t\mathrm{d}Y_t$ Aug 17 '20 at 9:18
• Thank you so much! :) Aug 17 '20 at 16:51