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Buffelhead's stock price is $227 and could halve or double in each six-month period. Assume that you own a one-year American put option on Buffelhead
Buffelhead's stock price is $227 and could halve or double in each six-month period. Assume that you own a one-year American put option on Buffelhead stock with an exercise price of $227. The interest rate is 18% a year. a. Would you ever want to exercise an American put early? b. Calculate the value of the Buffelhead American put. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. Calculate the value of the put if it had been European-style. Note: Do not round intermediate calculations. Round your answer to 2 decimal places
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