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Exercise 5.2 Suppose you pay 5 to buy a European (K=100, t=1/2 ) put option on a given security. Assuming a nominal annual interest rate

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Exercise 5.2 Suppose you pay 5 to buy a European (K=100, t=1/2 ) put option on a given security. Assuming a nominal annual interest rate of 6 percent, compounded monthly, find the present value of your return from this investment if (a) S(1/2)=102; (b) S(1/2)=98

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