What is the value of option
Problem
There is an asset available in period 1. In period 2 it can take on values $0,$1,$3, or $4 with equal probability. An option allows the holder to buy the asset in period 2 for $2. What is the value of the option?
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In period 2 it take on values $0,$1,$3 or $4 with equal probability. An option allows the holder to buy asset in period 2 for $2. What is the value of option?
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