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You are attempting to value a put option with an exercise price of $190 and one year to expiration. The underlying stock pays no dividends,
You are attempting to value a put option with an exercise price of $190 and one year to expiration. The underlying stock pays no dividends, its current price is $190, and you believe it has a 50% chance of increasing to $250 and a 50% chance of decreasing to $90. The risk-free rate of interest is 10%. a. What will be the payoff to the put, P, if the stock goes up? Answer is complete and correct. Payoff 0 b. What will be the payoff, Pd, if the stock price falls? X Answer is not complete. Payoff c. What is the value of the put using the risk-neutral shortcut? (Do not round intermediate calculations. Round your answer to 3 decimal places.) X Answer is not complete. Expected value
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