Question: Let S = $50, r = 5% (continuously compounded), d = 4%, s = 35%, T = 1. In this situation, the appropriate values of

Let S = $50, r = 5% (continuously compounded), d = 4%, s = 35%, T = 1. In this situation, the appropriate values of u and d are 1.28722 and 0.78467, respectively. Using a 2-step binomial tree, calculate the value of a $55-strike European put option.

Selected Answer:	c. $9.851
Answers:	a. $9.370
	b. $9.607
	c. $9.851
	d. $8.444
	e. $9.688

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