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Consider a two-period binomial model in which a share currently trades at a price of R160....

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Finance

Consider a two-period binomial model in which a share currentlytrades at a price of R160. The share price can go up or down by 10%each period. The risk-free rate is 7 percent. Calculate the priceof the European call and American put options expiring in twoperiods with an exercise price of R145 and R148 respectively.

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Consider a two-period binomial model in which a share currentlytrades at a price of R160. The share price can go up or down by 10%each period. The risk-free rate is 7 percent. Calculate the priceof the European call and American put options expiring in twoperiods with an exercise price of R145 and R148 respectively.

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