Compute the price of a derivative that pays you s4123, Financial Management

Compute the price of a derivative that pays you s4123

A stock is currently priced at $25. In 4 months it will be either $22 or $29. The risk-free rate is 6% per annum with continuous compounding. Let S_4/12 be the price of the stock in 4 months. Compute the price of a derivative that pays you (S_4/12)^3 dollars in 4 months.

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Financial Management: Compute the price of a derivative that pays you s4123

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Financial Management: Compute the price of a derivative that pays you s4123

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