Question: For the situation considered in Problem 12.12, what is the value of a six-month European put option with a strike price of $51? Verify that

For the situation considered in Problem 12.12, what is the value of a six-month European put option with a of $51? Verify that the European call and European put prices satisfy put–call parity. If the put option were American, would it ever be optimal to exercise it early at any of the nodes on the tree?

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The tree for valuing the put option is shown in Figure S122 below We get a payoff of 51 5035 ... View full answer

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