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A non-dividend-paying stock currently sells for$300 and the stock price can increase or decrease by 15% inone year. The risk-free rate is 2% per annum.

A non-dividend-paying stock currently sells for$300 and the stock price can increase or decrease by 15% inone year. The risk-free rate is 2% per annum. What is the price of 2-year American put option with thestrike price of$300? Use the two-step tree. Is early exercise optimal?

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