Consider european put option with the strike price

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Consider a European put option with the strike price of $50. Suppose the current price for the underlying risky asset is S0 = $50. The risk-free rate in the economy is rf = 5% per year. The option matures 1 year from now. The underlying asset does not pay dividends. Price this option using the method of replicating portfolios and believing that the price for the underlying asset may be either $60 or $45 one year from now. Price the option above when T = 2 years using replicating portfolios.

Could you solve this in excel with formulas shown please

Reference no: EM131552612

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