7. Suppose that ln(S) and ln(Q) have correlation =0.3 and that S0 = $100, Q0 =...

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7. Suppose that ln(S) and ln(Q) have correlation ρ =−0.3 and that S0 = $100, Q0 =

$100, r = 0.06, σS

= 0.4, and σQ

= 0.2. Neither stock pays dividends. Use Monte Carlo to find the price today of claims that pay the following:

a. S1Q1

b. S1/Q1 c.

S1Q1

d. 1/(S1Q1)

e. S2 1Q1

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