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Use the information for the question(s) below. The current price of KD Industries stock is $20. In the next year the stock price will either go up by 20% or go down by 20%. KD pays no dividends. The one year risk-free rate is 5% and will remain constant. -The risk neutral probability of an up state for KD Industries is closest to:


A) 37.5%
B) 60.0%
C) 40.0%
D) 62.5%

E) None of the above
F) B) and D)

Correct Answer

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