14 and 15:

16. Use Exerc ises 14 and 15 and the law of one price to find the cost Vo of a claim with payoff SN(K - SN)+ 14. Show that the cost of a claim with payoff SN(5x-K) is 2 where(u d)(1i) - ud 15. Show that the cost of a claim with payoff SN(SN -K is 2 0 where m, and pare defined as In Theorem 7.3.1, u = (u + d)(1 + i-ud. 16. Use Exerc ises 14 and 15 and the law of one price to find the cost Vo of a claim with payoff SN(K - SN)+ 14. Show that the cost of a claim with payoff SN(5x-K) is 2 where(u d)(1i) - ud 15. Show that the cost of a claim with payoff SN(SN -K is 2 0 where m, and pare defined as In Theorem 7.3.1, u = (u + d)(1 + i-ud