Binomial pricing: Assume that the stock of ABC, Inc., is currently trading for $16 and will either rise to $18 or fall to $12 in one year. The risk-free rate for one year is 1 percent. What is the value of a put option with a strike price of $10?
A) $0
B) $2.00
C) $2.33
D) $5.00
Correct Answer:
Verified
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