Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:The current stock price is $50. The stock price can go up by 10% or go down by 10% in
each month for 3 months. The risk-free interest rate is 12%. What will be the price of 3-
months European Put option using 3-Step Binominal option pricing model if the strike
price of the option is $55?
Answer choices:
a. $2.34
b. $8.91
c. $5.24
d. $5.00
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