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Q4 Suppose you set up a spreadsheet with 10 periods. You wish to value an option with a one-year expiration. The stocks annual standard deviation
Q4 Suppose you set up a spreadsheet with 10 periods. You wish to value an option with a one-year expiration. The stocks annual standard deviation is 30%, the risk-free rate is r = 4% and the dividend yield on the stock is 1%. Using the calibration solution what would be the value for u? [Express to at least 4 decimal places] Q5 What would be the value for d? [Express to at least 4 decimal places] Q6 What would be the value for p? [Express to at least 4 decimal places]
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