In exercise 1, compute the state prices q U and q D , and use these prices
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In exercise 1, compute the state prices qU and qD, and use these prices to calculate the value today of a one-year put option on the stock with exercise price $30. Show that put-call parity holds: That is, using your answer from this problem and the previous problem, show that:
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To solve this problem we need to follow these steps Compute the state prices qU and qD Calculate the value today of a oneyear put option on the stock ...View the full answer
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