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bachelor in business administration
Polytechnic State University Sanluis Jan-2006 - Nov-2010
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Polytechnic State University Jan-2012 - Nov-2016
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Harvard Square Academy (HS2) Mar-2012 - Present
Category > Business & FinancePosted 16 May 2017My Price5.00
You own a lot in Key West, Florida
You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,370,000. Over the past five years, the price of land in the area has increased 5 percent per year, with an annual standard deviation of 28 percent. You have approached a buyer and would like the option to sell the land in the next 12 months for $1,520,000. The risk-free rate of interest is 3 percent per year, compounded continuously.
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What is the price of the put option necessary to guarantee your sales price? (Round your answer to 2 decimal places. (e.g., 32.16))