Question: Let S 0 = $10, K = $10, r = 8%, T = 0.5, and q = 0. Let u = 1.3, d = 0.8,

Let S0 = $10, K = $10, r = 8%, T = 0.5, and q = 0. Let u = 1.3, d = 0.8, and n = 1.

a. What are the premium, , and B for a European put?

b. Show both the put and the synthetic put in a diagram.

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