Footnote 1 shows that the correct discount rate to use for the real-world expected payoff in the
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Footnote 1 shows that the correct discount rate to use for the real-world expected payoff in the case of the call option considered in Figure 12.1 is 42.6%. Show that ifthe option is a put rather than a call the discount rate is -52.5%. Explain why the two real-world discount rates are so different.
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