Question: Build a binomial tree for stock price evolution. Specifically, set the upper movement of the price (u) to an expression that will depend on the

Build a binomial tree for stock price evolution. Specifically, set the upper movement of the price (u) to an expression that will depend on the number on your group.

u = (1.10 + Group Number/100),

Group1,u=1.11.Group2=1.12. Group3=1.13,...,Group50=1.60

You can define d = 1/u.

Calculate and show the new Binomial tree for N=6.
What are the terminal values of each path? Define the appropriate filtrations for each of these values.

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To build the binomial tree for stock price evolution well use the given expression for the upper movement u and calculate the corresponding value for d Then well apply the binomial tree model to calcu... View full answer

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