Question: Assume stock XYZ does not pay dividends and has a
Assume stock XYZ does not pay dividends and has a market value of $98 per share. There is a 60-percent chance that the stock will trade for $130 in one year, and a 40-percent chance that it will trade for $55 in one year. What is the value of a put option with an exercise price of $90 if the risk-free rate is 5 percent per year?
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