Question: 5. Binomial Trees: S(0) = 40, K = 40, o = 30.00%, r = 8.00%, q = 0, T = 0.5 yr, N = 2

5. Binomial Trees: S(0) = 40, K = 40, o =

5. Binomial Trees: S(0) = 40, K = 40, o = 30.00%, r = 8.00%, q = 0, T = 0.5 yr, N = 2 a) Solve for u and d using the Drifted Binomial model b) Construct the Binomial Tree. Use the replication of risk approach to show call option premium, 4, and B at every node of the tree

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