Adigital option is one in which the payoff depends in a discontinuous way on the asset price. The simplest example is the cash-or-nothing option, in which the payoff to the holder at maturity T is X1{ST>K} where X is some prespecified cash sum. Suppose that an asset price evolves according to the binomial model in which, at each step, the asset price moves from its current value Sn to one of Snu and Snd. As usual, if T denotes the length of each time step, d < erT < u. Find the time zero price of the above option. You may leave your answer as a sum.

Answers

Answer 1

Answer:

[tex]V_{0} = e^{-rt}[/tex] ∑ [tex]uPdx^{(1-p)} *S_{o}[/tex]  

Step-by-step explanation:

The Payoff to the holder at maturity T = X1{ST > K}, where X = pre-specified cash sum.

Current value of asset price = Sn  after evolvement of asset price in reference to binomial model

Hence at every  step value changes to SnU and Snd

where ; d < e^rΔT < u  and Δ T = length of each step

u = ups

d = downs

Determine the time zero price of the above option

First we will find the price after each period

After one period :

when the price goes up, Sn + ΔT = Su

when the price goes down, Sn + ΔT = Sd

After  period two

For Su

when price goes up, Sn +2ΔT = Su2

when price goes down, Sn +2ΔT = Sud

For Sd

when  price goes down, Sn +2ΔT = Sd2

when price goes up, Sn +2ΔT = Sdu

To get the time zero price we will have to apply the same procedure in reverse position den get the sum pf all ups and downs which is

sum of all ups and downs = [tex]e^{-rT}[/tex]∑ [tex]uPd^{(1-p)}[/tex]

[tex]V_{0} = e^{-rt}[/tex] ∑ [tex]uPdx^{(1-p)} *S_{o}[/tex]  


Related Questions

APPLICATIONS
LINE RELATIONSHIPS Think of each segment in the diagram as part of a
line. Fill in the blank with parallel, skew, or perpendicular.
10. DE, AB, and GC
С
DĖ and BE are 2
A А
12. BE and GC
13. Plane GAD and plane CBE are
D
E
are
11.
B В
are

Answers

Answer:bb

Step-by-step explanation:

The company financial officer was interested in the average cost of PCs that had been purchased in the past six months. She took a random sample of the price of 10 computers, with the following results. $3,250, $1,127, $2,995, $3,250, $3,445, $3,449, $1,482, $6,120, $3,009, $4,000. What is the 10th percentile?

Answers

Answer:

$1,482 is the 10th percentile.

Step-by-step explanation:

xth percentile:

If a measure is said to be in the xth percentile, it means that x% of the measures are smaller than it, and (100-x)% are larger.

In this question:

10 computers, the 10th percentile is the value that is larger than 10% of the prices.

The prices, sorted in an increasing way, are:

$1,127, $1,482, ...

Computers at a price of $1,482 have larger prices than 10% of the population, so $1,482 is the 10th percentile.

a. Draw a rectangle with an
area of 39 squares, and
perimeter of 32 units.
a

Answers

Answer:

It has side lengths of 3 and 13

Step-by-step explanation:

If it has an area of 39, then let the sides be x and y: thus we get the two relationships:

xy=39

2(x+y)=32

From the second equation, you get x+y=16. Now, rearrange to get y=16-x. You can now plug this into the first equation:

x(16-x)=39 -> 16x-x^2=39 -> x^2-16x+39=0 -> (x-3)(x-13)=0

This implies that x=3, or x=13, which further implies that the side lengths must be 3 and 13.

The value of (1-w) (1-w*2) , where w is the cube root of the complex number is?

Answers

Answer:

3

Step-by-step explanation:

1+ω+w²=0

ω³=1

(1-ω)(1-ω²)=1-ω²-ω+ω³

=1-ω-ω²+1

=2+1-1-ω-ω²

=3-(1+ω+ω²)

=3-0

=3

8/15-1/5

For points or brainliest

Answers

Answer:

1/3

Step-by-step explanation:

The answer is 1/3 to find out how look at the picture above!

it’s equals 1/3 one third

A highway department is studying the relationship between traffic flow and speed. The following model has been hypothesized. where traffic flow in vehicles per hour vehicle speed in miles per hour The following data were collected during rush hour for six highways leading out of the city. Traffic Flow () Vehicle Speed () 1257 36 1329 45 1227 30 1336 50 1349 55 1124 25 a. Use the data to compute the coefficients of this estimated regression equation (to decimals). Enter negative value as negative number. (Create the variable first using Data/Transform

Answers

Answer:

ŷ = 0.1286X - 123.2175 ;

R = 0.9465

R² = 0.8958

Step-by-step explanation:

Given the data:

Traffic Flow, X : ()

1257

1329

1227

1336

1349

1124

Vehicle speed, Y () :

36

45

30

50

55

25

The estimated regression equation using a linear regression calculator is given thus:

ŷ = 0.1286X - 123.2175

According to the general linear regression formula :

y = mx + c

Where ; y = predicted variable (vehicle speed)

x = predictor variable (traffic flow)

Slope, m = 0.1286

Intercept, c = 123.2175

The correlation Coefficient, R = 0.9465, This depicts a strong positive relationship between traffic flow and vehicle speed.

The Coefficient of determination, R² = 0.9465² = 0.8958 ; This means about 89.5% of variation in Vehicle speed can be explained by the regression line.

harriet is 2 years less than a thirnd of her brothers ace. Harriet is 3 years ols. How old is her brother?​ please help right now

Answers

Answer:

her brother is 15 years old

Step-by-step explanation:

let 'b' = her brother's age

Harriet is 3 years old but Harriet is also '1/3b - 2'

3 = 1/3b - 2

5 = 1/3b

b = 5(3) or 15

Help scroll through the pics

Answers

Answer:

there is no pics any problem?

Need help ASAP giving 55 points and a branleist

Answers

Answer:

Step-by-step explanation:

1.

Igneous rock can change into sedimentary rock or into metamorphic rock. ... Igneous rock forms when magma cools and makes crystals. Magma is a hot liquid made of melted minerals. The minerals can form crystals when they cool.

2. The three processes that change one rock to another are crystallization, metamorphism, and erosion, and sedimentation. Any rock can transform into any other rock by passing through one or more of these processes.

3. The three types of metamorphism are Contact, Regional, and Dynamic metamorphism. Contact Metamorphism occurs when magma comes in contact with an already existing body of rock.

19/20 and 23/25 common denominator

Answers

Hello!

The common denominator is 100.

~Sophia

Solve the following inequality: |3x|>x+20

Answers

Answer:

x>10,x<−5

Step-by-step explanation:

[tex]x > - 5[/tex] or [tex]x < 10[/tex] are the two possible solutions to the given  inequality.

What are absolute value functions?

An absolute value function is a function that contains an algebraic expression within absolute value symbols.

What is inequality?

A statement of an order relationship—greater than, greater than or equal to, less than, or less than or equal to—between two numbers or algebraic expressions.

According to the given question.

We have an inequality |3x| > x + 20

Solve the above given inequality |3x| > x + 20

⇒ [tex]-(x + 20) < 3x < +( x + 20)[/tex]

⇒ [tex]-x -20 < 3x < x + 20[/tex]

⇒ [tex]3x > -x -20[/tex] or [tex]3x < x + 20[/tex]

⇒ [tex]3x+x > -20[/tex] or [tex]3x - x < 20[/tex]

⇒ [tex]4x > -20[/tex] or [tex]2x < 20[/tex]

⇒[tex]x > -5[/tex] or [tex]x < 10[/tex]

⇒ x ∈ (-∞, -5)∪(10,∞)

Hence, [tex]x > - 5[/tex] or [tex]x < 10[/tex] are the two possible solutions to the given  inequality.

Find out more information about absolute value inequalities here:

https://brainly.com/question/27517767

#SPJ2

The local newspaper tells you that ad space costs 40 per column-inch. A "column-inchis space one column wide nch high. You want to buy a space 3 columns wide and 5 inches high. What will it cost you?
A.) $40
B.) $120
C.) $200
D.) $600

Answers

Answer:

it should be 600

Step-by-step explanation:

40x3=120x5=600

Sorry if the picture is scuffed. Pls help fast

Answers

Answer:

C

Step-by-step explanation:

the domain would be all positive real numbers, including zero

9/10 times 1/5 PLS HURRY I ONLY HAVE 2 MINUTS

Answers

0.18 or as a fraction: 9/50
0.18 or 9/50. it depends which one your asking for.

What is the exact circumference of a circle with a radius of 15 cm?

A. 107 cm

B. 157 cm

C. 307 cm

D. 60 cm​

Answers

Step-by-step explanation:

Given. radius (r) = 15 cm

Circumference (C)

= 2 π r

= 2 * 3.14 * 15

= 94.2 CM

I Got this answer.....

I got 94.25 cm. Are those the only options?

a manager of company plans to produce 3000 units in a day employing 15 workers working 8 hours.How many units can be manufactured when manager employs 18 workers working 6 hours?​

Answers

Answer:

2,700 units

Step-by-step explanation:

if the are 5 buses and the quatation amount is R8,100 how much will each person pay ​

Answers

Answer:

R1620

Step-by-step explanation:

1620 ×1=1620

1620×2=3240

1620×3=4860

1620×4=6480

1620×5=8100

Write the equation of a line given its slope,m=6 and its y-intercept, b=-5

Answers

Answer:

Y = 6X-5

Step-by-step explanation:

substitute the value of slope and Y intercept in the standard equation Y = MX + B

where M is the slope and b is the y-intercept

To investigate whether there is a difference in opinion on a certain proposal between two voting districts, A and B, two independent random samples were taken. From district A, 35 of the 50 voters selected were in favor of the proposal, and from district B, 36 of the 60 voters selected were in favor of the proposal. Which of the following is the test statistic for the appropriate test to investigate whether there is a difference in the proportion of voters who are in favor of the proposal between the two districts (district A minus district B)? A. 35-36 A 50 B. 35-36 0.7 0.6 V 50 0 + 60 C. 0.7-0.6 (0..) (.x) (+) 0.7-0.6 D. V(0.7)(0.6) (Hot 50+60 0.7 -0.6 E. (0.7) (0.6) VE 60

Answers

Answer:

C:      t= x1`-x2`/√p^q^(1/n1 +1/n2)

0.7−0.6/(0.65)(0.35)√(1/50+1/60)

Step-by-step explanation:

The options given are

A

35−36/ 35/√50+3660

B

35−36/0.7/√50+0.660

C

0.7−0.6/(0.65)(0.35)√(1/50+1/60)

D

0.7−0.6/(0.7)(0.6)/√(1/50+1/60)

E

0.7−0.6/(0.7)(0.6)/√150+160

↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔↔

This is a test hypothesis about difference of  means between two proportions.

The test statistic used is

t= x1`-x2`/√p^q^(1/n1 +1/n2)

x1`= 35/50= 0.7

x2`= 36/60= 0.6

so

x1`-x2`

= 35/50-36/60

= 0.7-0.6

p^= 35+36/50+60= 71/110= 0.645= 0.65

q^= 1-p^= 1-0.65= 0.35

p^q^= (0.65) (0.35)

n1= 50 and n2= 60

therefore √1/n1 +1/n2= √1/50+1/60

Now Putting the values in the test statistics we get

t= x1`-x2`/√p^q^(1/n1 +1/n2)

0.7−0.6/√(0.65)(0.35)(1/50+1/60)

Hence C is the correct option

Using the z-distribution, it is found that the test statistic for the appropriate test to investigate whether there is a difference in the proportion of voters who are in favor of the proposal between the two districts is given by:

[tex]z = \frac{0.1 - 0}{0.0906}[/tex]

What are the hypothesis tested?

At the null hypothesis, it is tested if there is no difference between the proportions, that is, the subtraction is zero, hence:

[tex]H_0: p_A - p_B = 0[/tex]

At the alternative hypothesis, it is tested if there is a difference between the proportions, that is, the subtraction is not zero, hence:

[tex]H_1: p_A - p_B \neq 0[/tex]

What is the mean and the standard error for the distribution of the difference of proportions?

First, we find the mean and the standard error for each proportion:

[tex]p_A = \frac{35}{50} = 0.7[/tex]

[tex]s_A = \sqrt{\frac{0.7(0.3)}{50}} = 0.0648[/tex]

[tex]p_B = \frac{36}{60} = 0.6[/tex]

[tex]s_B = \sqrt{\frac{0.6(0.4)}{60}} = 0.0633[/tex]

Then, for the difference:

[tex]\overline{p} = p_A - p_B = 0.7 - 0.6 = 0.1[/tex]

[tex]s = \sqrt{s_A^2 + s_B^2} = \sqrt{0.0648^2 + 0.0633^2} = 0.0906[/tex]

What is the test statistic?

It is given by:

[tex]z = \frac{\overline{p} - \mu}{s}[/tex]

In which [tex]\mu = 0[/tex] is the value tested at the null hypothesis.

Hence:

[tex]z = \frac{0.1 - 0}{0.0906}[/tex]

To learn more about the z-distribution, you can take a look at https://brainly.com/question/16313918

What are the prime numbers of 30

Answers

Answer:

2,3,5

Step-by-step explanation:

Answer:

2, 3 and 5 are the prime numbers

Step-by-step:

A tape manufacturer has created a new formula that is supposed to be more adhesive on all types of surfaces. Managers wish to conduct an experiment on aluminum and wood to see how well the tape sticks to them. To determine this, they take a random sample of tape with the new formula and use four different weights taped to random places on each of the two surfaces. They will measure how long the tape holds the weights on each surface and compare the times. Which of the following best describes this experiment?a. This is an observational study.b. This is an experiment with blocking.c. The type of surface is a confounding variable.d. This is a double-blind experiment.e. This is a randomized experiment resulting in the placebo effect.

Answers

Answer:

This is an experiment with blocking ( B )

Step-by-step explanation:

The best way to describe this experiment is an experiment with blocking this is because the Type of surface where the tape is been tested can be considered a  blocking variable while the weights can be considered  as treatments

A blocking variable is a variable used in experiment which is not of primary interest to the experiment  observer ( I.e. The tape is supposed to hold on all types of surfaces and not just on Aluminum and wood surface )

solve the formula for q

p = 2n + 8q

a. q = p - 2n
b. q = 2n - p / 8
c. q = 2p - n
d. q = 2n - p
e. q = p -2n / 8

please & thank you!!!​

Answers

Answer:

I think it is B because it makes sense and I have done algebra before.

16
Select the correct answer.
Which of these numbers are 11 units from 0 on the number line?
A: 0
B: +11
C: -11
O A.
A and B
O B.
A and C
O C.
B and C
OD. Conly

Answers

Answer:

b and c

Step-by-step explanation:

The distance from New York City to Riverhead is approximately 150 miles. On a map whose scale is 24mi= 2inch, what is the distance between the two locations in inches?​

Answers

Answer:

12.5 inches

Step-by-step explanation:

To best find this answer, we should set up a proportion. Our first fraction is practically given to us in the problem, and would look like this:

[tex]\frac{2in}{24mi}[/tex]

Next, we need to set up our second fraction. An important thing to make sure of is that the 150 is on the same side as the 24 since they are both miles. Here is what the final equation should look like:

[tex]\frac{2in}{24mi} = \frac{x}{150mi}[/tex]

To solve, just cross multiply and divide! First, multiply 2 by 150, giving you 300. Next, just divide the 300 by the remaining 24, giving you a final answer of 12.5 inches. Here's what the final calculations look like:

2in X 150mi = 300

300 / 24mi = 12.5in

Answer:

12.5 inches is your answer

A rectangle has area of 150 in2. The ratio of the length to the width is 3:2.
Find the length and width of the rectangle. (This diagram is not to scale),


The diagram is just an rectangle, there are no measurements of what the base or width are

Answers

I’m doing this to but I have no clue how to do this

Answer:

length = 15 in

width = 10 in

Step-by-step explanation:

let '3x' = length

let '2x' = width

A = l x w

150 = 3x(2x)

150 = 6x²

x² = 150/6

x² = 25

x = [tex]\sqrt{25}[/tex]

x = 5

Length = 3(5) = 15 in

Width = 2(5) = 10 in

What fractions are the same

Answers

Ohhhhhh I get it I thought something else

Answer:

equivalent fractions

Step-by-step explanation:

When fractions have different numbers in them, but have the same value, they are called equivalent fractions. Let's take a look at a simple example of equivalent fractions: the fractions ½ and 2/4. These fractions have the same value, but use different numbers.

Alex scored a 75% on his history test if he correctly answered an 18 question how many questions did Alex answer incorrectly ​

Answers

Answer:

24

Step-by-step explanation:

18 is 75% of 24.

John roller skates 48km in 3 hours. What is his average speed in kilometers per hour?

Answers

Answer:16km/hr

Explanation:

48km/3hr= 16km/hr

Can anyone please help me with 13-16 I’m begging anybody

Answers

Answer:

-3

Step-by-step explanation:

An even number of negative numbers will give a positive answer. An odd number of negative numbers will give a negative answer.

13-16, 16 is larger than 13 so it's negative

PLEASE HELP I WILL GIVE BRAINLEST.
A rectangle with an area of 58 ft² is dilated by a factor of 8.



What is the area of the dilated rectangle?

Enter your answer in the box. Do not leave your answer as a fraction.


ft²

Answers

Answer:

The correct answer is 40

Step-by-step explanation:

I took the quiz

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