Question: 10.6 Let S = $100, K = $95, = 30%, r = 8%, T = 1, and = 0. Let u = 1.3, d =

10.6 Let S = $100, K = $95, = 30%, r = 10.6 Let S = $100, K = $95, = 30%, r = 8%, T = 1, and = 0. Let u = 1.3, d = 0.8,

and n = 2. Construct the binomial tree for a call option.

End-of-Chapter Problem 10.7: Repeat the option price calculation in Problem 10.6 for a stock price of $120, keeping everything else fixed. What is the new premium? Find the closest price. [Reference: End-of-Chapter Problem 10.6] 36.8 37.8 38.8 40.8 End-of-Chapter Problem 10.7: Repeat the option price calculation in Problem 10.6 for a stock price of $120, keeping everything else fixed. What is the new premium? Find the closest price. [Reference: End-of-Chapter Problem 10.6] 36.8 37.8 38.8 40.8

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