Binomial model for put options

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A stock is worth $40 today. In the next six months it may increase to $46 or decrease to $35. The risk-free rate of interest is 4% per year. Use the binomial model to determine the price of a put option with a strike price of $40 and an expiration date in six months. Please show your work and choose from the answer choices below;a. 3.62;b. 1.85;c. 2.32;d. 3.10;e. 2.50

    • 11 years ago
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