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Use the following information to answer the following question. AAA stock has a current price of $60 , pay no dividends, and will either increase

Use the following information to answer the following question. AAA stock has a current price of $60, pay no dividends, and will either increase by 25% or decrease by 25% each period. The risk-free rate is 5%.

What would be the value of a two-period American put option with a strike price of $100? Show ALL your work!

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6.25 (A) Po 6_ (B) .6 2524 6_ 55K (C) 4 43.75 .4_ 66.25

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