Consider a cash-or-nothing call option that will pay out 200 kr in 6 months if the non- dividend paying underlying asset price at that time is larger than 100 kr?Find the value of this derivative in a one step binomial model with u=1.1 and d=0.9?

The continuously compounded interest rate is 10% per annum for all maturities and todays price of the underlying asset is 100 kr?

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The value of a cashornothing call option in a onestep binomial model can be determined by ... View the full answer