Suppose S(0) = $100, r = 0.06, S = 0.4, and = 0. Use equation (20.32)

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Suppose S(0) = $100, r = 0.06, σS = 0.4, and δ = 0. Use equation (20.32) to compute prices for claims that pay the following:
a. S2
b.√S
c. S−2
Compare your answers to the answers you obtained to Problem 19.6.

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Derivatives Markets

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Authors: Robert McDonald

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Suppose S(0) = $100, r = 0.06, S = 0.4, and = 0. Use equation (20.32)

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Derivatives Markets

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