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Consider a three-period ( t = 0,1, 2, 3 ) binomial option pricing model. There are 3-period put options on the stock. The values of the underlying variables are S = $50, n = 3, K = $48, u =1.1, d = 0.9, r =1.02 (a) what is the risk-neutral probability that a put option will be in-the-money on maturity date? (b) What is the price of a European put option today? (c) What is the price of an American put option today? (d) What is the dollar value of premature exercise for the American put option?

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