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Home / Questions / What is the price of a bond that after 2 years pays S0 + max(0, S2 − S0)? b. Suppose

What is the price of a bond that after 2 years pays S0 + max(0, S2 − S0)? b. Suppose


a. What is the price of a bond that after 2 years pays S0 + max(0, S2 − S0)?
Suppose the bond pays S0 + [λ × max(0, S2 − S0)] in year 2. For what λ will the bond sell at par?

Nov 25 2019 View more View Less

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