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1. A stock is trading for $95, the strike price is $102, u = 1.05, d = .9, and the risk-free rate based on continuous
1.A stock is trading for $95, the strike price is $102, u = 1.05, d = .9, and the risk-free rate based on continuous compounding is 15%.Use a one period binomial model to:
a.Find the value of an American put that will expire in 3 months.
b.Please explain your reasoning for whether the put should be exercised early or not.
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