2. The possible stock prices for XYZ Corporation over the next two years are:

The risk-free interest rate is 10% per year and the stock pays no dividends. Consider a European put with an exercise price of $50 and a time to expiration of 2 years.

Construct a synthetic bond with the stock and put in year 0 and compute the implied interest rate

Sd=40 Pd= Sdd=30