Buffelheads stock price is 220 and could halve or double in, Ask an Expert

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Buffelhead's stock price is $220 and could halve or double in each six-month period. Assume that you own a one-year American put option on Buffelhead stock with an exercise price of $220. The interest rate is 21% a year.

a. Would you ever want to exercise an American put early?

b. Calculate the value of the Buffelhead American put.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Calculate the value of the put if it had been European-style.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92054526

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