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Please anwer the following: Assume that an underlying stock has a current price of $50 and pays no dividends. The risk-free rate is 5% per
Please anwer the following:
Assume that an underlying stock has a current price of $50 and pays no dividends. The risk-free rate is 5% per period, and the stock price follows the following binomial tree: $60 $50 $40 A new derivative: if the stock price goes up, payoff of this derivative is $12.38; $1.27 if the stock price goes down What is the current price of this derivativeStep by Step Solution
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