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  3. a stock price is currently $80. it is known that a

A stock price is currently $80. It is known that at the end of 4...

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Accounting

A stock price is currently $80. It is known that at the end of 4 months it will be either $75 or $85. The risk-free interest rate is 5.0% per annum with continuous compounding. 3. What is the value of p i.e., the probability of stock going up? 4. What is the value of a 2-month European put option with a strike price of $80? Formulas: u = Su So d = Sp+ So p = (e-rxt - d) (u - d) Co= e-rxt [(p x cu+ (1 - p) x cd]
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A stock price is currently $80. It is known that at the end of 4 months it will be either $75 or $85. The risk-free interest rate is 5.0% per annum with continuous compounding. 3. What is the value of pi.e., the probability of stock going up? 4. What is the value of a 2 -month European put option with a strike price of $80 ? Formulas: u=SuS0d=SDS0 p=(e1td)(ud)c0=eF1[(pcu+((1p)cd]

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