Chapter 03 · Section 3.1

Binomial Pricing Question 8

The diagram of the stock price evolution develops in this direction ------>
<--------The diagram of the call value evolution develops in this direction.

What is the price of the call?

a) --999999/-1
b) -40.41
c) -10
• d) +36.73
  Yes. The calculation is made in the following manner: ((1/1.10) x ((60.36 x .50) + (20.45 x .50)) Continue

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