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For a three-period binomial model for stock prices, you are given: i) Each period is...

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Finance

For a three-period binomial model for stock prices, you are given:

i) Each period is 4 months

ii) The current price for a nondividend-paying stock is 70.00

iii) u = 1.2,

iv) d = 0.8,

v) The continuously compounded risk-free interest rate is 5%

Calculate the current price of a 1-year 80-strike American put option on the stock.

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Question For a three-period binomial model for stock prices, you are given: i) Each period is 4 months ii) The current price for a nondividend-paying stock is 70.00 iii) u = 1.2, iv) d = 0.8, v) The continuously compounded risk-free interest rate is 5% Calculate the current price of a 1-year 80-strike American put option on the stock. Possible Answers A 10.55 B 11.66 12.77 D 13.88 E 14.99

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