A financial institution plans to offer a derivative that pays off a dollar amount equal to 2

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A financial institution plans to offer a derivative that pays off a dollar amount equal to 2

ST at time T, where ST is the stock price at time T. Assume no dividends. Defining other variables as necessary use risk-neutral valuation to calculate the price of the derivative at time zero. (Hint: The expected value of 2 ST can be calculated from the mean and variance of ST given in Section 13.1.)

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