Question: 1.16. Modify the MATLAB/SCILAB code of Algorithm 1.6 to use an n-step binomial lattice for estimating the value of the call option (where n is

1.16. Modify the MATLAB/SCILAB code of Algorithm 1.6 to use an n-step binomial lattice for estimating the value of the call option (where n is a supplied parameter).

Show that it is not until n ≥ 512 (or thereabouts) that the estimated initial value of the call option converges to $3.40 to the nearest cent.

Use this modified code to refine the value of the call option in the situations described in Exercises 1.11–1.12.

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