Consider the following exotic option whose payoff at maturity is given by the square root of the

Question:

Consider the following exotic option whose payoff at maturity is given by the square root of the stock price less the strike price if it has a positive value, zero otherwise:

max[ S(2) –K,0].

Using the preceding data except for assuming a new strike price is $5, determine the value of this exotic option under the assumption of no- arbitrage.

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity. Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...