# Thread: Need help with financial maths

1. ## Need help with financial maths

Hi everyone

This is my first time in these forums and was wondering if anyone could help me with this question?
I enrolled in some finance subjects, and this particular subject happens to be heavily mathematical, and I am having quite some problems, as I do not have a maths background...

I am required to derive a proof on reset strike options.

CR(S) = Price of Reset Call Option with inital stock price St and reset price Sr. Payoff = Max{St-min(Sr,K),0}

PR(S) = Price of Reset Put Option with inital stock price St and reset price Sr. Payoff = Max{max(Sr,K)-St,0}

C(S) = Price of Vanilla Call Option with inital stock price St

P(S) = Price of Vanilla Put Option with inital stock price St

S is stock price
K is strike price
t is option maturity
r is strike reset date

a) Prove that CR(S) >= C(S) and PR(S) >= P(S), for all values S.
b) For what values of r do the inequalities above become equalities?

I have been struggling with this for quite some time and any help would be greatly appreciated.

But I should have been more clear.
The last time I did any maths was over 10 years ago, and such questions are baffling to me.

I'm not asking for a solution, but rather, was hoping that someone could guide me in solving this. Give me ideas on where I should start or something that will help me get started...

3. ## Re: Need help with financial maths

Originally Posted by mungbean