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Problem 2:(20 points ) A binary call option pays $1 if the terminal stock price...

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Problem 2:(20 points ) A binary call option pays $1 if the terminal stock price ST is at or above K, and it pays nothing otherwise. Similarly, a binary put option pays $1 if STK, and pays nothing if ST>K. Let 1(ST) be the payoff function of a European call option with strike price K, and let 2(ST) be the payoff function of a binary call with strike price K. Find a relation between 2(ST) and 1(ST)

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