Question: Answers needed for each part with step by step solution thanks :) Starting from the Black-Scholes equation in the form V, = SVss + SVs

 Answers needed for each part with step by step solution thanks

Answers needed for each part with step by step solution thanks :)

Starting from the Black-Scholes equation in the form V, = SVss + SVs - kV, where k is a constant paramenter, use the transformation V = Eez+BTU (1,7) where S = Eet and E is the constant exercise price, to determine the parameters a and B such that U satisfies the heat equation U,=Uu A certain type of option defined on the domain 0 0 satisfies the payoff condition U = 1 at T = 0 and boundary conditions U = 0 at x = 0 and r = 1. Use separation of variables for U to show that the option value V is given by 4E (1-Abz_ (3+4), e-(2m+1)*x+ sin(2m + 1)2 2m + 1 VE Starting from the Black-Scholes equation in the form V, = SVss + SVs - kV, where k is a constant paramenter, use the transformation V = Eez+BTU (1,7) where S = Eet and E is the constant exercise price, to determine the parameters a and B such that U satisfies the heat equation U,=Uu A certain type of option defined on the domain 0 0 satisfies the payoff condition U = 1 at T = 0 and boundary conditions U = 0 at x = 0 and r = 1. Use separation of variables for U to show that the option value V is given by 4E (1-Abz_ (3+4), e-(2m+1)*x+ sin(2m + 1)2 2m + 1 VE

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