What are the risk-neutral probabilities

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The current stock price is $ 50. In 3 months, its price changes according to a binomial tree, u is 1.2 and d is 0.8. The stock pays no dividends and continuous compounded interest rate is 8%. There is a put option on this stock with the strike price of $ 55 maturing in 3 months. According to the Binomial Model, what are the risk-neutral probabilities?

Reference no: EM132396711

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