Assume the following: LN(S) and LN(Q) have a correlation coefficient of -0.65, S(0 ) = 55, Q(0 ) = 60, r = 0.04, ?s = 0.22 ?Q = 0.15, and dividends = 0. Using formula 20.39, what is the price of a claim that pays Q/?
A) $8.16
B) $9.16
C) $10.16
D) $11.16
A
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