Question: Use a 2-step binomial tree to value a put option. (20%) All the steps in your calculation should be shown including the calculation of P

Use a 2-step binomial tree to value a put option. (20%)

Use a 2-step binomial tree to value a put option. (20%) All the steps in your calculation should be shown including the calculation of P and the calculation of each of the option nodes U, D, UU, UD & DD. Assume that at each node the stock moves up 20% or down 20% The option expires in 2 years. The interest rate is 5% continuously compounded. The spot price is 100 and the option strike price is 104. Early Exercise is not possible with this option

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