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Question 6 (10 points) ABC stock is selling for $30 today and the stock price is expected to move up to $40.00 or down to
Question 6 (10 points) ABC stock is selling for $30 today and the stock price is expected to move up to $40.00 or down to $22.50 in a year. A one-year put option has an exercise price of $30 and the risk-free rate is 7%. If the expected value of the put option in a year is $450, what is the probability that the stock price will go down to $22.50 in a year? 1) 30% 2) 40% 3) 50% 4) 60% 5) 70%
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