Binomial pricing: Assume that the shares of Gizmo Motors are currently trading for $29 and will either rise to $32 or fall to $5 in one year. The risk-free rate for one year is 2 per cent. What is the value of a put option with a strike price of $30?
A) $0
B) $0.41
C) $1.78
D) $2.20
Correct Answer:
Verified
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