medium · Quantitative Finance
A discrete probability space has two outcomes, Up and Down, with P(Up) = 0.6 and P(Down) = 0.4.
If the risk-neutral measure Q requires Q(Up) = 0.45, what is the value of the Radon-Nikod'ym derivative L on the outcome 'Down'?
- 0.75
- 0.55
- 1.375
- 1.10
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