Question: Can you please help explain how to solve thank you Let S = $45, K = $40, r = 3% (continuously compounded), T = 1,

Can you please help explain how to solve thank you

Let S = $45, K = $40, r = 3% (continuously compounded), T = 1, and d = 0. Let u = 1.35, d = 0.65, and n = 1. What are D and B for a European call?
Selected Answer: Can you please help explain how to solve thank you Leta.

D = 0.4374; B = 14.9774
Answers: a.

D = 0.4374; B = 14.9774
b.

D = 0.8392; B = 22.1763
S = $45, K = $40, r = 3% (continuously compounded), Tc.

D = 0.6587; B = 18.6984
d.

D = 0.5224; B = 25.8973
e.

D = 0.8787; B = 14.6222

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