Problema stock price is currently 30 every 6 months the, Ask an Expert

Accounting

Problem:

A stock price is currently $30. Every 6 months the price will either go up by 12% or down by 8%. The risk-free rate is 4% per annum with continuous compounding.

Required:

Question 1: Compute the price of a one-year European put option with strike price $32.

Question 2: Compute the price of a one-year American put option with strike price $32.

Note: Please show guided help with steps and answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168999

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