Suppose that Alpha, Inc. is trading at $101 per share and that u= .02, d=...
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Suppose that Alpha, Inc. is trading at $101 per share and that u= .02, d= -.02, and that the periodic risk-free rate is 1%. The stock pays no dividends. a) Draw a three-period tree diagram for the potential stock prices b) Determine the value of a three-period option having an exercise price of $100.
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