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Year O Year ! Year 2 GG $ 1 . 20 $ 1. 10 GB $ 1. 05 $ 1 . 00 $ 1. 05

Year O Year ! Year 2 GG $ 1 . 20 $ 1. 10 GB $ 1. 05 $ 1 . 00 $ 1. 05 BG $ 0. 95 BB $ 0. 90 Assume that the risk- free rate is 5 percent per year , compounded annually . Compute the value of the option to scale down approximately

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