# Anybody knows the answer to this exercise found in PWIQF?

I got this question from the last exercise of chapter 2 from "paul wilmott introduces quantitative finance" book. Appreciate your help.

• I gave you the link to the solution below - if this answers your question it would be great if you could upvote and accept the answer - Thank you :-) Jan 20 '15 at 11:28

Let's think about it like this:

$V(E,T) = \int_E^{\infty} (x-E)^{+} \rho (x) dx$

Then $\frac{\partial C}{\partial E} = \int^\infty_E \rho(x) dx$

and $\frac{\partial^2 C}{\partial K^2} = \rho(K)$

Ill leave you to interpret these quantities. Hint, what is the defintion of the value of a contingent claim?

You can find the solution here:
http://www.wiley.com/legacy/wileychi/pwiqf2/supp/c02.pdf

For all solutions see my answer here: https://quant.stackexchange.com/a/16061/12