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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A trader has an American put option with strike price of 50.Theunderlyingassetisstockwithaspotpriceof50. The underlying asset is stock with a spot price of 50.Theunderlyingassetisstockwithaspotpriceof40. Using an one-step binomial tree to evaluate the option. Suppose the stock price will go up or down by $8 in 6 month, the risk-free rate is 6.2%, what is the value of this American put?

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