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3. Problem 13.24 - A stock price is currently $30. During each two-month period for the next four months it is expected to increase by

image text in transcribed 3. Problem 13.24 - A stock price is currently $30. During each two-month period for the next four months it is expected to increase by 8% or reduce by 10%. The risk-free interest rate is 5%. Use a two-step tree to calculate the value of a derivative that pays off where is the stock price in four months? If the derivative is American-style, should it be exercised early

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