1.For a two-state binomial tree option model, if the stock initial price is $120 per share and the strike price is $100, the up parameter is 1.2 and down parameter is 0.8, what the value of Suu and Cud? (Suu is the stock value at the second state moved up level, while, Cud is the option value at the second state of the model level.)

2.

At the end of year 2019, you observed that the S&P 500 index was 3000, the yield of the U.S. 10-year treasury note was 1.4% and the S&P 500 index earning yield was 3.6%. The spread between the earning yield and the 10-year Treasury note was______? You forecasted for 12 months forward EPS of S&P 500 index is $100 you expected the Fed will reduce twice of the Fed Fund rate and each time to raise 0.25%. Assuming the spread will remain at the same level by the end of the year 2020. You expected the S&P 500 index will be _____ at the end of the year 2020?

3.Johnson & Johnson Corp. stock is trading at $120 per share. You expected the stock can be either $150 or $100 per share in one year. In order to hedge your position, how many shares of call option do you need to remove out the risk if strike price is $140 (negative sign indicates write the call, and positive sign indicates long the call)? If risk-free rate is 10%, whats the call option price today?

4.

Suppose you have 100 shares of Apple, Inc. stock and want to use a collar strategy on the stock that is trading at $390 per share. A strike 440 call option on the stock is priced at $10.00 pert share and a strike 340 put option on the stock is priced at $8.00 per share. What are the break-even prices of the collar (from that you may start to loss profits)?