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  3. a stock price is currently $40. it is known that a

A stock price is currently $40. It is known that at the end of 3...

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Finance

A stock price is currently $40. It is known that at the end of 3 months it will be either $45 or $35. The risk-free rate of interest with quarterly compounding is 8% per annum. Calculate the value of a 3-month European put option on the stock with an exercise price of $40. Verify that no-arbitrage arguments and risk-neutral valuation arguments give the same answers. Show all work (not excel)

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