Assume the Following: LN(S)and LN(Q)have a Correlation Coefficient of -0 $\sqrt{Q S}$

question 10

Multiple Choice

Assume the following: LN(S) and LN(Q) have a correlation coefficient of -0.20,S(0) = 45,S(Q) = 55,r = 0.03,σs = 0.18 σQ = 0.28,and no dividends.Using formula 20.39,what is the price of a claim that pays 1/ $\sqrt{Q S}$
?

• A) $3.02
• B) $2.02
• C) $1.02
• D) $0.02

---

Definitions:

Functional Neurological Disorder

A condition wherein patients experience neurological symptoms without a clear structural or biochemical cause, such as paralysis, movement disorders, or seizures.

Indigestion

A condition characterized by symptoms such as stomach discomfort, bloating, and nausea, typically resulting from difficulty in digesting food.

Dehydration

A condition resulting from the excessive loss of water from the body, often accompanied by an imbalance in essential minerals.

Dissociative Amnesia

A disorder characterized by gaps in memory for personal history, often due to trauma or stress.