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A firms stock price is $112. It will either increase or decrease by 10% in month 1 and 10% in month 2. The risk-free annual

A firms stock price is $112. It will either increase or decrease by 10% in month 1 and 10% in month 2. The risk-free annual effective rate is 7.5%. 1. Using the delta-hedging (replicating portfolio) approach, find the premium of a 2-month put option with a strike price of $118.

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