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Use risk-neutral valuation to calculate the probabilities that will give you the put and call prices in the following question: A stock price is $10
Use risk-neutral valuation to calculate the probabilities that will give you the put and call prices in the following question: A stock price is $10 now. In 1 month it can go to $11 or $9. The annual interest rate is 5% with continuous compounding. Using risk-free portfolios, determine the value of the one-month European put with strike price 10 and European call with strike price 9.5
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