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A stock price is $101.37 now. it can go 8.32%up. it can go 7.69% down. Construct a two-period binomial tree for this stock. The annual
A stock price is $101.37 now. it can go 8.32%up. it can go 7.69% down. Construct a two-period binomial tree for this stock. The annual interest rate is 1.84% with continuous compounding. Use risk-neutral probabilities to calculate the value of a 1-year European at the money put with the strike price of 100. Calculate the put value at each node of the tree. Aso calculate that of American put with strike price 100 and everything else the same (and when you should exercise early the put )
u = 1.0832
d = 0.9231
no excel
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