Question: Let S = $40, K = $45, = 0.30, r = 0.08, T = 1, and = 0. a. What is the price

Let S = $40, K = $45, σ = 0.30, r = 0.08, T = 1, and δ = 0.
a. What is the price of a standard call?
b. What is the price of a knock-in call with a barrier of $44? Why?
c. What is the price of a knock-out call with a barrier of $44? Why?

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a A standard call is worth 41293 b A knock in call will also be worth 41293 y... View full answer

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