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Importance Sampling and Stock Insurance Suppose I sell you an insurance contract on the stock price for firm A. Firm A's stock price follow a log normal distribution: S(T) = So exp(oWT) Suppose current stock price is 100. My contract will pay you 100,000 if the stock price at time T is below 10, and 0 otherwise. How much do you think the contract is worth? Estimate the value of the contract using both basic Monte Carlo as well as Importance sampling. Here . So = 100 T = 1 o= 0.3 Hint: Estimate the probability that S(T)