(1) Problem Set 1: Assume we are using the Black Scholes model where the risk free invest- ment earns a continuously compounded rate r and the stock price satisfies the stochastic differential equation dS(t) = uS(t)dt +oS(t)dBt 1. What are the prices of the asset or nothing put and cash or nothing put? Thes options pay when S(T) K}] in the pricing measure which uses the share as numeraire where ds(t) = (r+ -)S(t)dt +oS(t)dB + **)s(t)dt (1) Problem Set 1: Assume we are using the Black Scholes model where the risk free invest- ment earns a continuously compounded rate r and the stock price satisfies the stochastic differential equation dS(t) = uS(t)dt +oS(t)dBt 1. What are the prices of the asset or nothing put and cash or nothing put? Thes options pay when S(T) K}] in the pricing measure which uses the share as numeraire where ds(t) = (r+ -)S(t)dt +oS(t)dB + **)s(t)dt