Question: If European put price using a two-period binomial model assuming the following data is: S0 = 10, T = 2 months, u = 1.5, d
If European put price using a two-period binomial model assuming the following data is: S0 = 10, T = 2 months, u = 1.5, d = 0.5, r = 0.05, K = 7.
Would early exercise of the put option be optimal if the put is American? (Please show the calculation and explanation as well) and try to be neat
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
