Question: You are attempting to value a put option with an exercise price of $140 and one year to expiration. The underlying stock pays no dividends,

You are attempting to value a put option with an exercise price of $140 and one year to expiration. The underlying stock pays no dividends, its current price is $140, and you believe it has a 50% chance of increasing to $200 and a 50% chance of decreasing to $100. The risk-free rate of interest is 14%. a. What will be the payoff to the put, Pu, if the stock goes up? Answer is complete and correct. Payolf b. What will be the payoff, Pd. if the stock price falls? b. What will be the payoff, Pd, if the stock price falls? Answer is complete and correct. c. What is the value of the put using the risk.neutral shortcut? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

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