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you have chosen a binomal tree to model the price dynamic of a stock. the probability of an up move is 0.60. if the stock
you have chosen a binomal tree to model the price dynamic of a stock. the probability of an up move is 0.60. if the stock mives up, it earns a 5% return. if the stock moves down, it loses a 5% return. The current stock price is $100.
A.) compute the possible stock prices after two periods (based on the binomial tree for the stock price dynamic change).
B.) compute the corresponding probabilities for each possible price.
C.) compute the expected value of the stock price at the end of two periods.
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