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A stock selling at $50 will either go up 20% or go down 10% each month for the next 3 months. The risk-free rate is

A stock selling at $50 will either go up 20% or go down 10% each month for the next 3 months. The risk-free rate is 12% per annum with continuous compounding. Assume that a European put option is available for a strike price of $55 and a maturity of 3 months.

Use a 3-step binomial model to calculate the price of the put option.

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