Question: In the previous problem, assume that the exercise style on the option is American rather than European. What is the price of the option now?

In the previous problem, assume that the exercise style on the option is American rather than European. What is the price of the option now?

In the previous problem, There is a European put option on a stock that expires in two months. The stock price is $73, and the standard deviation of the stock returns is 70 percent. The option has a strike price of $80, and the risk-free interest rate is a 5 percent annual percentage rate. What is the price of the put option today using one-month steps?

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Since the exercise style is now American the option can be exercised prior to expiration At node B w... View full answer

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