Question: 2. (Finding r) In a binomial model a European put option is written on a stock selling today for $30. The exercise price of

2. (Finding r) In a binomial model a European put option is

2. (Finding r) In a binomial model a European put option is written on a stock selling today for $30. The exercise price of the put option is $40. The put option's payoffs are $20 and $5. The price of the put is $9.50. What is the riskless interest rate? Assume that the basic period is 1 year.

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