I just made this one up. To my knowledge, "Binarrier Options" don't exist, but maybe they do. A binary (a.k.a. digital, all-or-nothing) call option has a strike price of $49. It also has a knock-out barrier of $65. If the option pays you at expiration, it pays you exactly $10. The risk-free rate is 3.6% per period. If the underlying asset goes up, it will go up 20% per period and if it goes down, it will go down 10% per period. The underlying asset currently costs $50. The option expires in 2 periods. How much is this option worth today? Round to the nearest penny. Answer: X Obviously, I'm asking you to do another binomial tree here. Just keep in mind the barrier. Good luck! The correct answer is: 4.62 I just made this one up. To my knowledge, "Binarrier Options" don't exist, but maybe they do. A binary (a.k.a. digital, all-or-nothing) call option has a strike price of $49. It also has a knock-out barrier of $65. If the option pays you at expiration, it pays you exactly $10. The risk-free rate is 3.6% per period. If the underlying asset goes up, it will go up 20% per period and if it goes down, it will go down 10% per period. The underlying asset currently costs $50. The option expires in 2 periods. How much is this option worth today? Round to the nearest penny. Answer: X Obviously, I'm asking you to do another binomial tree here. Just keep in mind the barrier. Good luck! The correct answer is: 4.62