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Estimate the price of a European barrier option that expires in 30 days and that allows the

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Estimate the price of a European barrier option that expires in 30 days and that allows the owner to purchase a share of a given stock for $100 provided itsprice exceeds $110sometime in the next 30 days. The present price of the share is $100. Assume the stock price follows geometric Brownian motion with r = 0.05 and σ = 0.2.
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r005 2 sigma02 n10000 4 delta112n 5 SO100 alphar05sig...View the full answer


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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.

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