Binomial pricing: Assume that the stock of ABC, Inc., is currently trading for $44 and will either rise to $50 or fall to $29 one year. The risk-free rate for one year is 4 percent. What is the value of a put option with a strike price of $40?
A) $0
B) $2.20
C) $3.14
D) $5.54
Correct Answer:
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