Consider a 2-month American put whose exercise price is $101.The current stock price is $100. Let's assume

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Consider a 2-month American put whose exercise price is $101.The current stock price is $100. Let's assume that = 1.0594 and d = 0.9439.The risk-free rate is 5% per annum continuously compounding.Now suppose that the stock is expected to pay a dividend of $2 in one month's time.Using a two-period binomial tree, calculate the current value (price) of the 2-month American put.Keep 4 decimal places, e.g., $0.1234.

Posted Date: May 11, 2024 05:03 AM

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Consider a 2-month American put whose exercise price is $101.The current stock price is $100. Let's assume

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To calculate the current value price of the 2month American put using a twoperiod binomial tree we c... View the full answer

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