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A stock price is currently $60, with an annual volatility of 0.30. The risk-free rate is 4% per annum. Use the two-period binomial model to

a. find out the price of a one-year European put option on the stock with a strike price of $60.

b. find out the price of a one-year American put option on the stock with a strike price of $60.

Basic Finance, Finance

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