Question: A power option is a contract, whose value depends on the payoff V(S, T), with S = S a . Show that the generalized BlackScholes-equation

A power option is a contract, whose value depends on the payoff V(S, T), with S = S^a. Show that the generalized Black–Scholes-equation can be expressed in terms of , with adjusted cost-of-carry rate b_adj. and volatility σ_ad_j..

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