Construct a portfolio using put or call options

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Calculate the European and American values for a knock-out put option where the put option is knocked out if the stock price rises to 130 or if the stock falls to 70. Use the binomial model with the following values, S = 100; K=100; Rf = 3% T = 1 Year 12 time steps = 20%; 2% Dividend Yield 2) Construct a portfolio using put or call options which give the payoff below. All strikes are available.

Reference no: EM132459910

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