Let the price process XY (t) follow the geometric Brownian motion dXY (t) = sXY (t)dWY (t), and let.

Let the price process XY
(t) follow the geometric Brownian motion dXY (t) = σXY (t)dWY (t), and let
K be a general positive constant. (a) What is the price of a contract that pays
a unit of Y when XY (T ) ≥ K when T → ∞? How would you hedge
such a contract

(b) What is the price of a
contract that pays a unit of X when XY (T ) ≥ K when T → ∞?
How would you hedge such a contract? (c) Determine the price and the hedge of a
European call option with the payoff (XT − K · YT ) + when T →
∞.