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The current spot price of an asset is So = $200. Each month the price could increase to 1.10 times its current value (u-1.10). or

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The current spot price of an asset is So = $200. Each month the price could increase to 1.10 times its current value (u-1.10). or it could decrease to (1/1.10) times its current value (d=1/1.10) The interest rate is 0.20% per month. (a) What is the risk neutral probability for this problem? (b) What is the forward price F2

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