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14.6 Let S = $40, K = $45,0 =0.30. r =0.08. T = 1, and 8 = 0. a. What is the price of a
14.6 Let S = $40, K = $45,0 =0.30. r =0.08. T = 1, and 8 = 0. a. What is the price of a standard call? b. What is the price of a knock-in call with a barrier of $44? Why? c. What is the price of a knock-out call with a barrier of $44? Why? 14.7 Let S = $40, K = $45,0 =0.30, r = 0.08. 8 = 0, and T = {0.25, 0.5, 1,2,3,4,5, 100). a. Compute the prices of knock-out calls with a barrier of $38. b. Compute the ratio of the knock-out call prices to the prices of standard calls. Explain the pattern you see. 14.8 Repeat the previous problem for up-and-out puts assuming a barrier of $44
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