# Question: Suppose that ln S and ln Q have correlation 0 3 and

Suppose that ln(S) and ln(Q) have correlation ρ =−0.3 and that S0 = $100, Q0 =$100, r = 0.06, σS = 0.4, and σQ = 0.2. Neither stock pays dividends. Use Monte Carlo to find the price today of claims that pay the following:

a. S1 Q1

b. S1/Q1

c. √S1 Q1

d. 1/(S1Q1)

e. S21 Q1

a. S1 Q1

b. S1/Q1

c. √S1 Q1

d. 1/(S1Q1)

e. S21 Q1

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