# 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 S(0) = $100,

Q(0) = $100, r = 0.06, σS

= 0.4, and σQ

= 0.2. Neither stock pays dividends. Use

equation (20.38) to find the price today of claims that pay

a. SQ

b. S/Q

c.√SQ

d. 1/(SQ)

e. S2Q

Compare your answers to the answers you obtained to Problem 19.7.

Q(0) = $100, r = 0.06, σS

= 0.4, and σQ

= 0.2. Neither stock pays dividends. Use

equation (20.38) to find the price today of claims that pay

a. SQ

b. S/Q

c.√SQ

d. 1/(SQ)

e. S2Q

Compare your answers to the answers you obtained to Problem 19.7.

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