5. A stock is currently selling for 60. The price of the stock at the end of...

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5. A stock is currently selling for 60. The price of the stock at the end of the year is expected either to increase by 25 percent or to decrease by 20 percent. The riskless interest rate is 5 percent. Calculate the price of a European put on the stock with exercise price 55. Use the binomial option-pricing model.

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Financial Modeling

ISBN: 9780262024822

2nd Edition

Authors: Simon Benninga

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