6. Consider a contract that pays at the maturity of the contract where K-100 and T-1. Assume that St follows the Black- Scholes model. Recall that under the Black-Scholes model, log So has a normal distribution with mean (r-.52)t and variance -t. (a) Show that this contract can be statically hedged by binary options, put options, and a bond (b) Compute the price of this contract at time 0, using the normality of log and the Black-Scholes pricing formula. Model parameters are So = 100, r = 3%, and = 20%. 6. Consider a contract that pays at the maturity of the contract where K-100 and T-1. Assume that St follows the Black- Scholes model. Recall that under the Black-Scholes model, log So has a normal distribution with mean (r-.52)t and variance -t. (a) Show that this contract can be statically hedged by binary options, put options, and a bond (b) Compute the price of this contract at time 0, using the normality of log and the Black-Scholes pricing formula. Model parameters are So = 100, r = 3%, and = 20%