Question: You are attempting to value a put option with an exercise price of $190 and one year to expiration. The underlying stock pays no dividends,

You are attempting to value a put option with an exercise

You are attempting to value a put option with an exercise price of $190 and one year to expiration. The underlying stock pays no dividends, its current price is $190, and you believe it has a 50% chance of increasing to $250 and a 50% chance of decreasing to $100. The risk-free rate of interest is 15%. a. What will be the payoff to the put, Pu, if the stock goes up? Answer is complete and correct. Payoff $ 0 b. What will be the payoff, Pa, if the stock price falls? Answer is complete and correct. Payoff $ 90 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.) * Answer is complete but not entirely correct. Expected value 18.261 X

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