Suppose you had a stock currently valued at $100. One period later, you estimate that the stock price will either increase by 15% (to $115) or decrease by 10% (to $90). If the one-period rate of interest is 5%, at what price would the binomial option pricing model value a put option with an exercise price of $107.50?,a. Do this without using the put-call option parity formula.,b. Now use the put-call option parity formula to check your answer above.
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