Question: Binomial Model Variables U= 1.15 D= 0.90 Index price= $ 720 Strike price= $ 750 Hedge ratio= 0.5697 Interest rate= 3% Calculate the price investor

Binomial Model Variables

U= 1.15

D= 0.90

Index price= $ 720

Strike price= $ 750

Hedge ratio= 0.5697

Interest rate= 3%

Calculate the price investor paid two years ago for call option with strike price of $ 750 using the binomial valuation method and the data above.

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