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1. Price of a Binary Call Option. (10pts) Suppose that we are in the Black- Scholes economy, i.e. dS= u Sdt + o SdZ+ dB4

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1. Price of a Binary Call Option. (10pts) Suppose that we are in the Black- Scholes economy, i.e. dS= u Sdt + o SdZ+ dB4 = r Bidt. Compute the price of the binary call option that pays $1 at time T if St > K. 1. Price of a Binary Call Option. (10pts) Suppose that we are in the Black- Scholes economy, i.e. dS= u Sdt + o SdZ+ dB4 = r Bidt. Compute the price of the binary call option that pays $1 at time T if St > K

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