1a. Todays price of Capital One Financial Corporation (COF) is $50. COF does not pay dividends. One year from today, there are two possible states. In the u state, the price of COF is $100. In the d state, the price of COF is $25. The c.c. risk-free interest rate is zero percent. Assume there is no arbitrage. A power derivative has payoffs Xu = Su2 and Xd = Sd2. What is the price of a power derivative on COF?

1b. A fraction derivative has payoffs X_u = S_u/10 and X_d = S_d/10. What is the price of a fraction derivative on COF?