Question: ( 1 point) Consider an n=1 step binomial tree with T=.5. Suppose r, the annualized risk-free rate is 5%, and delta, the annualized dividend rate

( 1 point) Consider an n=1 step binomial tree with T=.5. Suppose r, the annualized risk-free rate is 5%, and delta, the annualized dividend rate is 3%. Also suppose the annualized standard deviation of the continuously compounded stock return, sigma, is 15%. Suppose further that the initial stock price, S=$115; and that the strike price K is $107. a) Determine the European call premium ? b) Determine the European put premium

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