The risk of the hedged portfolio was, therefore, the kind of risk that could be diversified away. Therefore, according to the Capital Asset Pricing Model, the hedged portfolio could earn only the riskless rate of interest. With the expected return on the hedged portfolio known, simple manipulation led to a finite difference equation that could be transformed into a differential equation (again, equation 1 in appendix D), the Black-Scholes option-pricing equation, as it was soon to be called.

Donald MacKenzie, An Engine, Not a Camera, loc. 581