Exercise 5.2 Suppose you pay 5 to buy a European (K = 100, 1/2) put option on a given security. Assuming a nominal annual in- terest rate of 6 percent, compounded monthly, find the present value of %3D your return from this investment if (a) S(1/2) = 102; (b) S(1/2) = 98. %3D

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