Contracts and Pricing I

Quanteaser has a $20\%$ chance of being acquired between Wednesday evening and Thursday morning. One share of its stock is worth $â¬30$ on Wednesday. If Quanteaser is acquired, then there is a $50\%$ chance that one share of its stock is worth $â¬50$ and a $50\%$ chance that one share of its stock is worth $â¬x$ . Otherwise, there is a $60\%$ chance that one share of its stock is worth $â¬0$ and a $40\%$ chance that one share of its stock is worth $â¬10$ . A fair contract that awards the buyer the right but not the obligation to buy the stock at $â¬40$ on Thursday is worth $â¬15$ . Compute $x$ .

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