Question: A 2-year American put is written on a stock whose current price is $42. You expect that in each year the stock price either goes

A 2-year American put is written on a stock whose current price is $42. You expect that in each year the stock price either goes up by 15% or decreases by 5%. The one-period interest rate is 5%. The options exercise price is $45. Will you ever exercise the option early?

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