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3. A stock price is currently $40. Over each of the next two three-month periods it is expected to go up by 20% or down

3. A stock price is currently $40. Over each of the next two three-month periods it is expected to go up by 20% or down by 20%. The risk-free interest rate is 5% per annum. What is the value of a six-month American put option with a strike price of $42?

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