PLEASE can u demonstrate the binomial tree model for this question! And tell me how to...

PLEASE can u demonstrate the binomial tree model for this question! And tell me how to work out the payoffs for the 2 period put!! Thanks

Q- The current price of Excel Network Systems stock is £60 per share. In each of the next two years the stock price will either increase by 20% or decrease by 10%. The 3% one year risk free rate of interest will remain constant. Calculate the price of a two year European put option on Excel Network Systems stock with a strike price of £60. Use binomial pricing

Expert Solution

The numbers in brackets are the payoffs from the option.

Let P be the probability of upside movement.

P = 0.434848

Option Price at Node A = e-003{(0.4348*26.4)+(0.565152*4.8)} = 13.77

Option Price at Node A = e-0.03{(0.4348*4.8)+(0.565152*0)} = 2.025584

Option Price at Node F = e-0.03{(0.4348*13.77)+(0.565152*2.02558)} = 6.923202

I am sure this is self explanatory, still if you feel you need help, do let me know.

jeff jeffy answered 2 years ago

difference between infant and adult oral microflora can u tell me please

Describe the microevolution of influenza and its consequences for vaccines. can u tell me please in...

Describe the microevolution of influenza and its consequences for vaccines. can u tell me please in detail

Discuss the molecular model for inheritance of DNA methylation can u tell me plzz in brief

please show me or tell me a trick, on how can i tell right away when...

please show me or tell me a trick, on how can i tell right away when a characteristics equation(system) is 1)overdamped 2)underdamped 3)critically damped 4) nonlinear show each an example write neatly!!!!!

Consider a two-period binomial tree model with u = 1.05 and d = 0.90. Suppose the...

Consider a two-period binomial tree model with u = 1.05 and d = 0.90. Suppose the per-period interest rate is 2%. Suppose the initial stock price is $100. Consider $95-strike call and put options on this stock. Which of the following statement is false based on above information? The put premium is $12.01 Possible payoffs of a call at the end of the two periods are $14.25, $0, and $0 Possible payoffs of a put at the end of the...

can u pls tell me how much it will cost to make 1 g of C2H5Br...

can u pls tell me how much it will cost to make 1 g of C2H5Br by using this reaction : ethane + Br2 & heat = CH3CH2BR we have 398 grams of ethane and it costs 226.32 dollars we have 684 grams of bromine and it costs 65.82 dollars u can presume that we have a perfiect yeild and pls round the answer to the nearest cent show all work pls ty

Can someone please tell me on how can I have a double and character as one...

Can someone please tell me on how can I have a double and character as one of the items on my list? Thanks! This is what I got so far and the values I am getting are all integers. #pragma once #include <iostream> class Node { public: int data; Node* next; // self-referential Node() { data = 0; next = nullptr; } Node(int value) { data...

Before doing this please tell me what is lift factor and tell me how did we...

Before doing this please tell me what is lift factor and tell me how did we calculate seasonal index for carlson's sales of january as 0.957 The Carlson Department store suffered heavy damage when a hurricane struck on August 31. The store was closed for four months (September through December), and Carlson is now involved in a dispute with its insurance company about the amount of lost sales during the time the store was closed. Two key issues must be...

Can you please tell me just the right answer for each question. Do not need explanation....

Can you please tell me just the right answer for each question. Do not need explanation. Thank you! QUESTION 1 The ____ strategies assume that people are rational and follow their own self-interest. ? Empirical-rational? Normative re-educative Power-coercive? Normative-educative 10 points QUESTION 2 In the ____ change outcomes image, some, but not all, change intentions are achievable. Intended? Partially intended? Unintended? Partially unintended 10 points QUESTION 3 The ____ image is based on an image of management as...

please tell me how I can construct er diagram on Netflix and on hotelmangement in dbms...

please tell me how I can construct er diagram on Netflix and on hotelmangement in dbms and also tell me how I convert er diagram of Netflix in third normal form(3nf). also explain the queries .

Question