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You model a stock price S(t) using a stochastic process, with t measured in years. Your model implies that the risk-neutral distribution for the stock price at t = 4 has probability density function fs(4)(x) = { x-40 50 0 if 40 < x < 50 else Assume that interest is compounded continuously at nominal rate r = 3.0%. Calculate the price of the stock at time 0 to the nearest pence. Do not enter the pound sign.

You model a stock price S(t) using a stochastic process, with t measured in years. Your model implies that the risk-neutral distribution for the stock price at t = 4 has probability density function fs(4)(x) = { x-40 50 0 if 40 < x < 50 else Assume that interest is compounded continuously at nominal rate r = 3.0%. Calculate the price of the stock at time 0 to the nearest pence. Do not enter the pound sign.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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You model a stock price S(t) using a stochastic process, with t measured in years. Your model implies that the risk-neutral distribution for the stock price at t = 4 has probability density function x-40 50 ƒs(4)(x) = { 0 if 40 < x < 50 else Assume that interest is compounded continuously at nominal rate r = 3.0%. Calculate the price of the stock at time 0 to the nearest pence. Do not enter the pound sign.
Transcribed Image Text:You model a stock price S(t) using a stochastic process, with t measured in years. Your model implies that the risk-neutral distribution for the stock price at t = 4 has probability density function x-40 50 ƒs(4)(x) = { 0 if 40 < x < 50 else Assume that interest is compounded continuously at nominal rate r = 3.0%. Calculate the price of the stock at time 0 to the nearest pence. Do not enter the pound sign.
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