The present value of cashflows is equal to V = 100. This value can move up the
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Question:
The present value of cashflows is equal to V = 100. This value can move up the next period with u = 1.1 to V = 110. The up factor is u = e^σ and the down factor is d = 1/u. Calculate the volatility σ for one period, expressed in decimals rounded to two digits.
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