Question: Problem 2 (6 pts) In a simple market one-period binomial tree model, we know that the simple compounding annual interest rate is given by i

Problem 2 (6 pts) In a simple market one-period binomial tree

Problem 2 (6 pts) In a simple market one-period binomial tree model, we know that the simple compounding annual interest rate is given by i = 8%. The stock price satisfies S(0) = 65 and S(1) = 80, with probabilit p, | 40, with probabilit 1 - P. where 0

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