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1.Chapter 21] We will derive a two-state put option value in this problem. Data: . The two possibilities for are 130 and 80. a.Show the

1.Chapter 21] We will derive a two-state put option value in this problem. Data: . The two possibilities for are 130 and 80.

a.Show the payoff of the put in each of the two possible states.

b.Form a portfolio of three shares of stock and five puts. What is the payoff to this portfolio in each of the two states?

c.What is the present value of the portfolio?

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