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True or False: suppose that the stock of IMB has a price of $7, and it follows a Binomial tree with factor of appreciation 1.4 and factor of depreciation 0.6. Consider the stock of IMB, and a 2- steps lived put option with a strike of $ 11. Then, the option premium must increase to $1.7.

True or False: suppose that the stock of IMB has a price of $7, and it follows a Binomial tree with factor of appreciation 1.4 and factor of depreciation 0.6. Consider the stock of IMB, and a 2- steps lived put option with a strike of $ 11. Then, the option premium must increase to $1.7.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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True or False: suppose that the stock of IMB has a price of $7, and it follows a Binomial tree with factor of appreciation 1.4 and factor of depreciation 0.6. Consider the stock of IMB, and a 2- steps lived put option with a strike of $ 11. Then, the option premium must increase to $1.7.
Transcribed Image Text:True or False: suppose that the stock of IMB has a price of $7, and it follows a Binomial tree with factor of appreciation 1.4 and factor of depreciation 0.6. Consider the stock of IMB, and a 2- steps lived put option with a strike of $ 11. Then, the option premium must increase to $1.7.
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