23. Another example of a power option is one that pays the amount (12) (a) Show...

23. Another example of a power option is one that pays the amount

(12)

(a) Show that the payoffs of this option may be written in terms of (11) and a vanilla call with strike K. [Hint. Expand the term (St - K)2 and rearrange.]

(b) Price the option (12) using the same binomial tree as in Question 23.