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6) Consider the Black-Scholes equation for the option price V(S,t) if the underlying does not...

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Accounting

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6) Consider the Black-Scholes equation for the option price V(S,t) if the underlying does not pay out dividends. (i) Consider now a function V(S,t)=10S+C21, where S is the underlying price, t is time, and C is a constant. Determine, showing all steps, all values of C for which V(S,t) is a solution to the Black-Scholes equation. (ii) For the solution V(S,t) determined in part (i) of the question define the value used for hedging

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