Question: QUESTION 2. COMPLETE THE QUESTION. (Total 14 marks) A stock lS currently trading at $130 and the stock's volatility is 0.21 pa. What is the

QUESTION 2. COMPLETE THE QUESTION. (Total 14 marks) A stock lS currently trading at $130 and the stock's volatility is 0.21 pa. What is the value of a 9-month American put option on this Stock Wlth a strike of $140? The risk-free interest rate is 2% p.a.r continuously compounded. Calculate the corresponding stock price and option value at each node on the tree. complete calculation process must be shown for full marks. ./"" D _,-' ? ,/" B ' z'( I '11-'- / ? '1k_' A /,!r E T \"me\" C ? T \"Ex! \\1 'I'I

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