Question: 7) In this question the volatility is 0.4 and the risk free rate of return is 0.08. The payoff function at expiry is shown in
7) In this question the volatility is 0.4 and the risk free rate of return is 0.08. The payoff function at expiry is shown in the graph. At expiry the option pays nothing if the stock price is below the exercise price of $20 and it pays the stock price if the stock price is greater than or equal to $20. taunla with savo Set up the integral that will calculate the value of this option as a function of the stock price, S, and time until expiry, t. What does the integral evaluate to if there is 6 months left to expiry
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