Question
Consider a European put option on the stock XYZ, with a $40 strike and 1 year to expiration. The stock does not pay dividends, and
Consider a European put option on the stock XYZ, with a $40 strike and 1 year to expiration. The stock does not pay dividends, and its current price is $41 The continuously compounded risk-free interest rate is 8%. The possible stock prices over 1 year is either $60 or $30. What is the put
price using the binomial model?
Group of answer choices
$ 4.796
$5.218
$6.353
$8.871
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Fundamentals of Futures and Options Markets
Authors: John C. Hull
8th edition
978-1292155036, 1292155035, 132993341, 978-0132993340
