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2. Consider the following equity security, safe asset, and put option as shown in the binomial diagrams below. Your problem is to find the arbitrage

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2. Consider the following equity security, safe asset, and put option as shown in the binomial diagrams below. Your problem is to find the arbitrage free price of the put option, p0. Find a portfolio of the equity (or, stock) and the bond which replicates the put option's payoffs. Use the Law of One Price to compute p0. K strike price E: put option (European Putexeacise at t=( only). options- Right hut NoT an OBLTGATION 2. Consider the following equity security, safe asset, and put option as shown in the binomial diagrams below. Your problem is to find the arbitrage free price of the put option, p0. Find a portfolio of the equity (or, stock) and the bond which replicates the put option's payoffs. Use the Law of One Price to compute p0. K strike price E: put option (European Putexeacise at t=( only). options- Right hut NoT an OBLTGATION

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