Question: (16.6) We will derive a two-state put option value in this problem. Data: S 0 = $170; X = $180; 1 + r = 1.10.

(16.6) We will derive a two-state put option value in this problem. Data: S₀ = $170; X = $180; 1 + r = 1.10. The two possibilities for S_T are $210 and $90.

b. What is the (nonrandom) payoff to this portfolio?

c. What is the present value of the portfolio?

d. Given that the stock currently is selling at $170, calculate the put value

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