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Consider an American put option with strike and maturity T for an underlying asset. Answer the following questions. (a) Explain how to find the American
Consider an American put option with strike and maturity T for an underlying asset. Answer the following questions.
(a) Explain how to find the American put option price using a M-step binomial tree model. You may use the following notations to create the tree model: upward and downward movements u and d, respectively, upward and downward probabilities by p and 1 , respectively, risk-free rate r, and initial price S0.
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