Answer: Q*EXP(-rT)*N(d2)

**Correct answer: D.** The value of a cash-or-nothing binary call is: \[ Q e^{-rT} N(d_2) \] ### Intuition - **\(Q\)** is the fixed cash payout if the option finishes in the money. - **\(e^{-rT}\)** discounts that future cash payment back to present value. - **\(N(d_2)\)** is the risk-neutral probability that the option expires in the money and pays out. So the option value is essentially: > **Present value of the payout × probability of receiving the payout** That is why the formula uses **\(N(d_2)\)**, not **\(N(d_1)\)**.

Author: Manit Arora