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Problem 2 (6 pts) In a simple market one-period binomial tree model, we know that the simple compounding annual interest rate is given by i

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Problem 2 (6 pts) In a simple market one-period binomial tree model, we know that the simple compounding annual interest rate is given by i = 8%. The stock price satisfies S(0) = 65 and 80, with probabilit p, S(1) = 1 40, with probabilit 1 - p, where 0

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