# Tag Info

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I'm not sure I'd call it 'subjective' or 'pre-conditioned'. Traditionally, ensuring the absence of arbitrage is a guiding principle for pricing, while the risk-neutral measure is most frequently used for theoretical results. Assuming you'll be using your forecasting for trading activities, using AoA to determine price is the right way to go. Consider ...

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As you said, $B$ is the lag or backward shift operator such that $BX_t=X_{t-1}$ and $B^pX_t=X_{t-p}$. Let $A$ now be polynomial, say $A(x)=a_1 x + a_2x^2+...+a_px^p$. Then, \begin{align} A(B) X_t &= \left( a_1 B + a_2B^2+...+a_pB^p\right) X_t \\ &=a_1 X_{t-1} + a_2 X_{t-2} + ... + a_p X_{t-p} \end{align} and \begin{align} \big(1-A\big)(B) X_t &=...

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