Question: 2. Pricing Formulas The following formula will be needed: r 1== (a) (3 points) An asset with price S at time 0 pays some cashflows.

2. Pricing Formulas The following formula will be needed: r 1== (a) (3 points) An asset with price S at time 0 pays some cashflows. The cashflows af probability p and Co with probability 1 - p and are paid annually from time 1 to tim a formula for the asset prices by assuming that the annualized) discount rate 18 cashflows are worth Co with wally from time 1 to time T. Provide (b) (3 points) An asset with price S at time 0 pays some cashflows. The cashflows are worth C, are paid every 6 months, and are perpetual. Provide a formula for the asset price S by assuming that the annualized) discount rate is r

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