A stock price is currently 50 over each of the next two, Ask an Expert

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A stock price is currently $50. Over each of the next two six-month periods it is expected to go up by 15% or down by 10%. The risk-free interest rate is 5% per annum with continuous compounding.

a) What is the value of a one year European put option with a strike price of $50?

b) What is the value of a one year American put option with the same strike price of $50?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91787618

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