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Question 9 (1 point) Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. i) Risk
Question 9 (1 point) Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. i) Risk neutral probability of the BAD scenario is ... Hint: it depends on rf, d, and u O 0.75 O 0.25 O 0.5 0 0.37 Question 10 (1 point) Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. Risk-neutral probability of good scenario is 0.75. j) What is a price of a put with strike $110 Hint: do not forget to compute PV of expected risk-neutral payoff 15 | 0 7.5 04.7 0
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