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Consider the Real Madrid stock index currently trading at S=128. You have modeled the evolution of this index in a binomialtree and have come up
Consider the Real Madrid stock index currently trading at S=128. You have modeled the evolution of this index in a binomialtree and have come up with the following parameters: u=1.08, d=0.93. The risk- free rate per step of the binomial tree is r=3%,and the dividend yield on the index is 6=0.02. The risk-neutral probability of an up-move in this setting is
0.529
0.660
0.598
0.667
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