Question: 5. Repeat the calculation for another set of parameters. S0 = $100 r=10% u=3/2=1.5 d=2/3 What is the premium on a 10% out of the

5. Repeat the calculation for another set of parameters. S0 = $100 r=10% u=3/2=1.5 d=2/3 What is the premium on a 10% out of the money call? If the spot price is $100 then the strike on the call is $110. (1 + 10%) * $100 = 110% * $100 = $110 What is the premium of a 10% out of the money put? If the spot price is $100 then the strike on the put is $90. (1 - 10%) * $100 = 90% * $100 = $90

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