Why do we need the condition S d < E to be able to value a down-and-out
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Why do we need the condition Sd < E to be able to value a down-and-out call by adding together known solutions of the Black–Scholes equation (as in question 1)? How would we value the option in the case that Sd > E?
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An increase in the volatility of the stock increases t...View the full answer
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Hardik Dudhat
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