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(SHOW ALL WORK) (ROUND TO THE NEAREST CENT) Eagletron's current stock price is $10. Suppose that over the current year, the stock price will either
(SHOW ALL WORK) (ROUND TO THE NEAREST CENT)
Eagletron's current stock price is $10. Suppose that over the current year, the stock price will either increase by 95% or decrease by 60%. Also, the risk-free rate is 25% (EAR). a. What is the value today of a one-year at-the-money European put option on Eagletron stock? b. What is the value today of a one-year European put option on Eagletron stock with a strike price of $19.50? c. Suppose the put options in parts (a) and (b) could either be exercised immediately, or in one year. What would their values be in this case? Eagletron's current stock price is $10. Suppose that over the current year, the stock price will either increase by 95% or decrease by 60%. Also, the risk-free rate is 25% (EAR). a. What is the value today of a one-year at-the-money European put option on Eagletron stock? b. What is the value today of a one-year European put option on Eagletron stock with a strike price of $19.50? c. Suppose the put options in parts (a) and (b) could either be exercised immediately, or in one year. What would their values be in this case
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