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How would you maintain a riskless hedge

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A stock price is currently 580 and its volatility is 5%. Using a 2-step binomial tree obtain the price of a 1 year American put on the stock with a strike price of $82. The risk-free interest rate is 3% per annum with continuous compounding. How would you maintain a riskless hedge using the option and the underlying stock?

Reference no: EM133001232

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