Question: i POST = i) 1 0.1 2 0.3 3 0.3 4 0.1 5 0.2 (10%) Suppose that we wish to price a European put option

i POST = i) 1 0.1 2 0.3 3 0.3 4

i POST = i) 1 0.1 2 0.3 3 0.3 4 0.1 5 0.2 (10%) Suppose that we wish to price a European put option with exercise price $5 and pay-off function V(ST) = max{5 ST,0}. Assume that the interest rate is zero and the stock price can take only five possible values according to the table in part (a). Evaluate E[V(ST)] explicitly

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