Chapter 03 · Section 3.1
Binomial Pricing Question 5
Assume that the stock rises in the first period and falls during the two following periods. What will be the value of the stock at the end of the third period?
a) --99999/0
b) -0/115.82
c) -115.84/99999
d) +115.83
The stock costs 110. It rose by 30 %, fell by 10 %, then fell again by 10 %.