Question: Let A(0) = 100, A(1) = 105, S(0) = 90 and S(1) = {100, with probability 2/5 80, with probability 3/5 Suppose a portfolio has

Let A(0) = 100, A(1) = 105, S(0) = 90 and

Let A(0) = 100, A(1) = 105, S(0) = 90 and S(1) = {100, with probability 2/5 80, with probability 3/5 Suppose a portfolio has 50 shares of stock and 40 shares of risk-free bond. Suppose P is a put option with stake price 95 and exercise time t = 1. Compute the price P(0) of this put option

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