Question: Let S = $45, r = 8% (continuously compounded), d = 5%, s = 40%, T = 2. In this situation, the appropriate values of

Let S = $45, r = 8% (continuously compounded), d = 5%, s = 40%, T = 2. In this situation, the appropriate values of u and d are 1.53726 and 0.69073, respectively. Using a 2-step binomial tree, calculate the value of a $35-strike European call option.

Selected Answer:	b. $15.025
Answers:	a. $16.276
	b. $15.025
	c. $17.632
	d. $16.518
	e. $15.278

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