Find the expected gain or loss for a holder of a european, Financial Management

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Find the expected gain or loss for a holder of a european

Find the expected gain (or loss) for a holder of a European put option with strike price $65 to be exercised in 10 months if the stock price on the exercise date may turn out to be $58, $61, or $72 with probability 1 4 , 1 4 , and 1 2 , respectively, given that the option is bought for $5.9, financed by a loan at 7% compounded continuously.

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Financial Management: Find the expected gain or loss for a holder of a european

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