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Consider an "exotic derivative" contract on the S&P500 index. Today, the index is 4200, and...

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Finance

Consider an "exotic derivative" contract on the S&P500 index. Today, the index is 4200, and the derivative contract will pay its holder $12 when the S&P500 doubles for the first time. Under the no-arbitrage condition, what should the price of this contract be today?

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