Hello, im new here and I already have some tough questions to ask of y'all. Maybe these problems may be familiar to the mods/helpers of the UK since it was first taught at Cambridge University in 1997.
Down to business:
The partial online book:
A Course in Financial Calculus - Google Book Search
I need help with #4,7,10
#4. (A) Prove lemma 1.3.2.
(B) What happens if we drop the assumption that d < e^rT <u?
#7. Show that if there is no arbitrage in the market, then any portfolio constructed at time zero that exactly replicates a claim C at time T has the same value at time zero.
#10 What is payoff of a forward at expiry? Use risk-neutral pricing to solve the pricing problem for a forward contract.