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It was crucial for our no arbitrage computations that there were only two possible values of the…


It was crucial for our no arbitrage computations that there were only two possible values of the stock. Suppose that a stock is now at 100, but in one month may be at 130, 110, or 80 in outcomes that we call 1, 2, and 3. (a) Find

It was crucial for our no arbitrage computations that there were only two possible values of the...