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Let S=$40,K=$40,r=8% (continuously compounded), =30%,=0,T= 0.5 year, and n=2. a. Construct the binomial tree for the stock. What are u and d ? Problems 3

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Let S=$40,K=$40,r=8% (continuously compounded), =30%,=0,T= 0.5 year, and n=2. a. Construct the binomial tree for the stock. What are u and d ? Problems 3 b. Show that the call price is $4.110. c. Compute the prices of American and European puts

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