The current price of a non-dividend paying stock is 50 an


The current price of a non-dividend paying stock is $50, volatility 20% and the continually compounding risk-free rate 5%. Use a two-step tree with 6-month steps to value

a) A European put option on the stock with a strike price of $48 that expires in 12 months

b) An American put option with the same strike and expiration.

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Financial Management: The current price of a non-dividend paying stock is 50 an
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