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1 Suppose a stock price is lognormal with drift u and volatility o, in other words S(t) s(0)eM+oW(t). Given K > 0, let Pk be

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1 Suppose a stock price is lognormal with drift u and volatility o, in other words S(t) s(0)eM+oW(t). Given K > 0, let Pk be the probability that S(T) > K. (a) Express Pk as the value of a particular integral. (b) Give an expression for Pk in terms of the cumulative normal distribution N()

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