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Problem 4 (6 pts) In a simple market one-period binomial tree model, we know that the simple compounding annual effective interest rate is given by

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Problem 4 (6 pts) In a simple market one-period binomial tree model, we know that the simple compounding annual effective interest rate is given by i=8%. The stock price satisfies S(0)=65 and S(1)={80,40,withprobabilitp,withprobabilit1p, where 0

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