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Use a two-step tree to value a two-year American put option today. The time step is one year. Assume the current price of the stock
Use a two-step tree to value a two-year American put option today. The time step is one year. Assume the current price of the stock is $30, the risk free rate (based on continuous compounding) is 8% per annum, and the strike price is $30. Finally, assume that stock moves up or down by 10% at each time step.
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