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9. The current spot price of a stock is $20, the expected rate of return of the stock is 10%, and the volatility of the
9. The current spot price of a stock is $20, the expected rate of return of the stock is 10%, and the volatility of the stock is 25%. The risk-free rate is 4%. Compute the price of a derivative whose payoff in 4 months In((S4/12)5) + (S4/12)0.441 + 32 where S4/12 is the stock price in 4 months. 9. The current spot price of a stock is $20, the expected rate of return of the stock is 10%, and the volatility of the stock is 25%. The risk-free rate is 4%. Compute the price of a derivative whose payoff in 4 months In((S4/12)5) + (S4/12)0.441 + 32 where S4/12 is the stock price in 4 months
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