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Suppose the current stock price is $240 and the Face value of the bond with coupon rate 5% is $100. The bond is selling at

Suppose the current stock price is $240 and the Face value of the bond with coupon rate 5% is $100. The bond is selling at par. The stock price will either go up 10% or down 14% in one year. There are one American call option and one American put option with exercise price of $250 that will be expired in two years.

What is the price of the American put option?

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Essentials of Corporate Finance

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

9th edition

978-1259277214

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