Use the Information for the Question(s)below

question 9

Essay

Use the information for the question(s)below.
The current price of Kinston Corporation stock is $10.In each of the next two years,this stock price can either go up by $3.00 or go down by $2.00.Kinston stock pays no dividends.The one-year risk-free interest rate is 5% and will remain constant.
-Using risk-neutral probabilities,calculate the price of a two-year put option on Kinston stock with a strike price of $9.

---

Definitions:

ICD-10-CM

International Classification of Diseases, Tenth Revision, Clinical Modification, a system used in healthcare for coding diagnoses, symptoms, and procedures.

ICD-10-PCS

The International Classification of Diseases, 10th Revision, Procedure Coding System; a system used by healthcare providers to classify and code all diagnoses, symptoms, and procedures recorded in conjunction with hospital care in the United States.

Use of Decimal

A numerical system that employs the base ten; extensively used in mathematics and measurements.

ICD-10-CM

The International Classification of Diseases, Tenth Revision, Clinical Modification; a system used by healthcare providers to classify and code all diagnoses, symptoms, and procedures recorded in conjunction with hospital care in the U.S.