Question: Answer the last one (1 point) We model the value of an asset at time T in the future, by S-100+10x where X is random

Answer the last one Answer the last one (1 point) We model the value of an

(1 point) We model the value of an asset at time T in the future, by S-100+10x where X is random variable with probability density function f given by f(x)-o otherwise Then the expected value of S is Es 105 Consider an option to buy the asset at time T for price K 105. The payoff function for the option is A(S) = max(S-105, 0) Then the expected value of the payoff is EA(S)-0

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

3. Buses arrive to a bus stop according to an exponential distribution with rate ?= 4 busses/hour. If you arrived at 8:00 am to the bus stop, a) what is the expected time of the next bus? b) Assume...

Formularium Management III Kevin Denis June 18, 2014 Use at own risk. Part I Inventory Control 1 Known demand (p198) 1.1 Basic EOQ model (p210) Assumptions: 1. Demand is xed at units per unit time....

i just need to solve part 1 please Part 1 Consider a network that has four nodes n1, n2, n3 and n4, and six directed arcs of the form a1 = (n1, n2), a2 = (n1, n3), a3 = (n2, n3 ), a4 = (n3), n2), a5...

Accidental poisoning of children is a great concern to the Poison Control Center. From the past, 12.5% of all children reported with accidental poisoning required hospitalization. For the years 1993...

The process by which price and output are determined in the real world is strongly affected by the structure of the market. A market consists of all the actual and potential buyers and sellers of a...

Each screenshot includes multiple parts. As so, please do all parts, or else I will have to give you a thumbs down. I need all parts or I cannot do anything! Thanks. Question 10, 12.5.89-LS HW Score:...

1. Consider a network that has four nodes n1, n2, n3 and n4, and six directed arcs of the form a1 = (n1, n2), a2 = (n1, n3), a3 = (n2, n3 ), a4 = (n3), n2), a5 = (n2, n4) and a6 = (n3, n4), where the...

Refer to the attachment for the questions L1 lil Explain what is meant by the multifactor model. You should define an? notation you use. [41 [ii] Enriefl'iir describe three different types of factor...

Write 2 paragraphs about Macro risks and the term structure of interest rates article. No max word count, page count, or formatting requirements but has to be submit to my tutor's work as my own....

Probability and Statistics - Problem Set c Keith M. Chugg October 2, 2015 1 Preliminaries, Combinatorics, Set Probability 1.1. A number of bats are in a cave. 2 bats can see out of their left eye. 3...

(10 marks) 3. For the signal flow graph diagram given below derive the transfer function. G3 G4 G2 y7 YA -H1 -H, -H3

In a certain railroad layout of the subgrade, it was decided to connect a - 5% grade with + 3% grade by a 140 m vertical parabolic sag curve. In the actual construction work, it was found out that...

Ambassador Corp. sells household cleaners producing a reverue stream that has remained unctanged in the bast few vears. The firm does not expect any future change in its earnings or dividendh. The...

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".