In: Finance
Consider a 2-period binomial model. the annual interest rate is 9%. the initial stock price is $50. In each period the stock price either goes up by 15% or down by 10%.
a. Price a European call option on the stock with exercise price $60
b. Price a European put option on the stock with exercise price $60
ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.
A.
B.