Apple is currently trading at $155. Apples daily stock return standard deviation is 2.5%. The risk-free rate
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Apple is currently trading at $155. Apple’s daily stock return standard deviation is 2.5%. The risk-free rate is 1.2% per year (0.012/12 per month). A call and put option on this stock with an exercise price of $180 mature in three months. For the pricing, use the binomial model with monthly periods.
(a) Draw the tree of values for the stock price.
(b) What is the current value the call and put option.
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