Find the current price of a one-year

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Find the current price of a one-year, $110-strike American put option on a non-dividend-paying stock whose current price is S(0)=$100. Assume that the continuously compounded interest rate equals r=0.08. Use a two-period binomial tree with u=1.2 and d=0.8 to calculate the price of the put option.

Reference no: EM131561476

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