Question: Let S = $ 1 0 0 , K = $ 9 5 , r = 8 % , T = 0 . 5 ,

Let S = $100, K = $95, r =8%, T =0.5, and \delta =0. For simplicity, let u =1.3, d =0.8 and n =1(that is,1 period). When constructing the binomial tree, what is the stock price at maturity (at the end of period 1) if the stock price goes up?
Question 1 options:
$130.00
$117.00
$136.50
$80.00
$72.00
$84.00

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!