"pdfTeX error (font expansion): auto expansion is only possible with scalable fonts"
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\RequirePackage[l2tabu, orthodox]{nag} % checks for outdated latex commands ... you can remove this if you want
\documentclass[10pt]{article}
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%
% PACKAGES
%
%%%%%%%%%%%%%%%%%%%%%%%%%%%%
\usepackage[T1]{fontenc}
\usepackage{lmodern}
\usepackage{microtype}
\usepackage{ccfonts}
\usepackage{amsmath} % need for subequations
\numberwithin{equation}{section}
\usepackage{graphicx} % need for figures
\usepackage[plainpages=false, pdfpagelabels]{hyperref} % enables and customizes hyperlinks
\hypersetup{
colorlinks = true,
citecolor = blue, %NavyBlue
linkcolor = Maroon,
urlcolor = Turquoise
}
\usepackage[dvipsnames]{xcolor}
\usepackage{amssymb} % gives you \mathbb{} font
\usepackage[mathscr]{eucal} % gives you \mathscr font
\usepackage{dsfont} % gives you \mathds{} font
%\usepackage[paperwidth=8.5in,paperheight=11in,top=1.25in, bottom=1.25in, left=1.00in, right=1.00in]{geometry}
\usepackage{mathtools} % need for `show only references'
\mathtoolsset{showonlyrefs=true} % only equations which are labeled AND referenced will numbered
% IMPORTANT NOTE...must use \eqref{} instead of (\ref{})
\usepackage{fixltx2e,amsmath} % Supposedly, this allows one to use \eqref{} in \caption{}.
\MakeRobust{\eqref}
\usepackage[left]{showlabels} % show labels
\linespread{1.3} % double-space everything with 1.6
\usepackage{amsthm} % need for theorem-proof environment
\allowdisplaybreaks % allows page breaks for long equations
% you can prevent a page-break with \\*
\theoremstyle{plain}
\newtheorem{theorem}{Theorem}
\numberwithin{theorem}{section}
\newtheorem{lemma}[theorem]{Lemma} % [theorem] ==> theorems and lemmas will share a counter
\newtheorem{proposition}[theorem]{Proposition}
\newtheorem{corollary}[theorem]{Corollary}
%%
\theoremstyle{definition}
\newtheorem{assumption}[theorem]{Assumption}
\begin{document}
For simplicity, we shall assume the following.
\begin{assumption}
The volatility process $\sigma$ evolves independently of $W$ and $N$. Moreover, $\sigma$ and the measure $\nu$ satisfy
\end{assumption}
\end{document}