A nondividend-paying stock is currently priced at

$76

.\ In one year, there will only be two possible values for the stock's price.\ The up factor per period if the stock price increases is

u=1.4

.\ The down factor per period if the stock price decreases is

d=0.7

.\ The continuously compounded risk-free interest rate is

6%

.\ A 1-year 75-strike European put option is priced using a one-period binomial tree. Calculate the number of shares of stock that must be purchased to replicate the put option.

1. A nondividend-paying stock is currently priced at $76. 2. In one year, there will only be two possible values for the stock's price. 3. The up factor per period if the stock price increases is u=1.4. 4. The down factor per period if the stock price decreases is d=0.7. 5. The continuously compounded risk-free interest rate is 6%. A 1-year 75-strike European put option is priced using a one-period binomial tree. Calculate the number of shares of stock that must be purchased to replicate the put option