Question: PLEASE, HELP WITH PART B! Problem 21-53 You are attempting to value a put option with an exercise price of $110 and 1 year to

PLEASE, HELP WITH PART B! Problem 21-53 You are attempting to value PLEASE, HELP WITH PART B!

Problem 21-53 You are attempting to value a put option with an exercise price of $110 and 1 year to expiration. The underlying stock pays no dividends, its current price is $110, and you believe it has a 50% chance of increasing to $120 and a 50% chance of decreasing to $100. The risk-free rate of interest is 7%. a. What will be the payoff to the put, Pu, if the stock goes up? What will be the payoff, Pd if the stock price falls? 0 Stock price rises Stock price falls 10 b. What is the weighted average value of the pay off? (Round your answer to 3 decimal places.) Discounting weighted average 4.662 X

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