Assume the Following: LN(S)and LN(Q)have a Correlation Coefficient of 0 $\sqrt[5]{Q}$

question 16

Multiple Choice

Assume the following: LN(S) and LN(Q) have a correlation coefficient of 0.40,S(0) = 60,Q(0) = 60,r = 0.05,σs = 0.30 σQ = 0.25,and dividend = 0.Using formula 20.39,what is the price of a claim that pays $\sqrt[5]{Q}$ ?

• A) $243.96
• B) $322.96
• C) $479.96
• D) $532.96

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