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Please use binomial option pricing model to find the price of the put option. The put option matures in a year and has exercise price $30. The price of the underlying stock is $30 today. At the end of the year, the stock price could be either $35 or $25. The interest rate on the risk-free asset is 5% per year. (Hint: Use the stock and the risk-free asset to replicate the payoff of the put option)

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Financial Management, Finance

Category:- Financial Management
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