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= Question 7. Consider a binomial model with So = 100, u = 1.2, d = 0.9, and r = 0.05. Consider an up-and-out barrier

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= Question 7. Consider a binomial model with So = 100, u = 1.2, d = 0.9, and r = 0.05. Consider an up-and-out barrier option with K = 90 and knockout barrier of B = 140. This behaves like a normal call option except that if the stock price rises above the knockout barrier, the option becomes worthless. The payoff of the up-and-out barrier option is Sr-Kif Sr > K and ST K and ST

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