Question Consider a one-year European stock put option. The current stock price is Sh. 50 and the exercise price is Sh.

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Question Consider a one-year European stock put option. The current stock price is Sh. 50 and the exercise price is Sh.

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Question Consider A One Year European Stock Put Option The Current Stock Price Is Sh 50 And The Exercise Price Is Sh 1
Question Consider A One Year European Stock Put Option The Current Stock Price Is Sh 50 And The Exercise Price Is Sh 1 (22.92 KiB) Viewed 31 times
Question Consider a one-year European stock put option. The current stock price is Sh. 50 and the exercise price is Sh. 54. The risk-free rate is 6% and the size of the up move is 1.25 per year. Required. Using binomial model a) Calculate the put price today (10 marks) b) Suppose the available put price is Sh. 3, determine the arbitrage strategy assume you trade 1,000 options. (15 marks)
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