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please solve this question, thank you! The current spot price of a stock is $34, the expected rate of return of the stock is 8%,
please solve this question, thank you!
The current spot price of a stock is $34, the expected rate of return of the stock is 8%, and the volatility of the stock is 20%. The risk-free rate is 3%. Compute the price of a derivative whose payoff in 6 months IS $8 if the stock price in 6 months, S6/12, is below $35, $5 if 35-S -55, and nothing otherwise 6/12 The current spot price of a stock is $34, the expected rate of return of the stock is 8%, and the volatility of the stock is 20%. The risk-free rate is 3%. Compute the price of a derivative whose payoff in 6 months IS $8 if the stock price in 6 months, S6/12, is below $35, $5 if 35-S -55, and nothing otherwise 6/12Step by Step Solution
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