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Consider a two-period binomial model in which a stock currently trades at a price of K65. The stock price can go up 20 percent or

Consider a two-period binomial model in which a stock currently trades at a price of K65. The stock price can go up 20 percent or down 17 percent each period. The risk-free rate is 5 percent.

(i) Calculate the price of a put option expiring in two periods with an exercise price of K60.

(ii) Calculate the price of a call option expiring in two periods with an exercise price of K70.

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