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Business, 13.04.2021 09:10 ponyolovezsosuk1074

Suppose company A stock is last time traded at 43.26$, and our analysis shows that in one year from now, its price would either increase or decrease by 35%. (i. e. d=0.65, u=1.35) Assume that risk-free rate is 1%
and the company pays no dividend in this time period.

1) What would be the payoff for a European Put Option written on Company A equity, with time to maturity
of 1 year, and strike price of 35$? Calculate the payoff for the up and down scenarios

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