Question: A B D E F G H K 165 166 167 Question 8 (10 points) Consider a stock worth $65 that can go up or

A B D E F G H K 165 166 167

A B D E F G H K 165 166 167 Question 8 (10 points) Consider a stock worth $65 that can go up or down by 25% per period. The risk free rate is 5%. And exercise price is $62. Use one Binomial Option Pricing Methods (both methods - Method 1 6 steps) and Method 2 (the probability concept) to calculate the call premium 168 169 170 171 172 173 METHOD 1 (enter the answer of each step) 174 175 176 Step 1 = Step 2 = Step 3 = Step 4 = Step 5 = Premium = 177 178 179 180 181 METHOD 2 182 Premium Premium 183 A B D E F G H K 165 166 167 Question 8 (10 points) Consider a stock worth $65 that can go up or down by 25% per period. The risk free rate is 5%. And exercise price is $62. Use one Binomial Option Pricing Methods (both methods - Method 1 6 steps) and Method 2 (the probability concept) to calculate the call premium 168 169 170 171 172 173 METHOD 1 (enter the answer of each step) 174 175 176 Step 1 = Step 2 = Step 3 = Step 4 = Step 5 = Premium = 177 178 179 180 181 METHOD 2 182 Premium Premium 183

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