Question: Options and mathematics: Do not skip calculations in the exercises and write as clear as possible. If some portion of the solution is not clearly

Options and mathematics:

Do not skip calculations in the exercises and write as clear as possible. If some portion of the solution is not clearly readable, it will be assumed to be wrong.

1. Find a constant portfolio consisting of European puts that replicates the European derivative with maturity T and pay-off Y depicted down here:

Options and mathematics: Do not skip calculations in the exercises and write

25 Y 2 3 3 5 S(T) - 1 -2 -3 Remark: For S(T) > 4 the pay-off is identically zero

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