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How would you use binomial option model to price put options? Consider a put option on a stock with a strike of $120. The underlying stock is trading at $110 right now. Next year, stock is expected to be either up by 10% or down by 10% from today’s price. If the risk- free rate of return is 5%, what is the put option price? Note: Use binomial model and not the put-call parity for this question.

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Financial Management, Finance

Category:- Financial Management
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