Question: please help me out this question Use the following information to answer questions 25 - 30 Consider the following binomial tree. The numbers in squares


Use the following information to answer questions 25 - 30 Consider the following binomial tree. The numbers in squares are stock prices. The numbers in circles will be option prices (# numbers are the exercise numbers to answer your calculation). Today, the stock is at 100 and can go up and down over the next week, and then again up and down from there. We are pricing a call struck at 85. 120 #25 110 #28 100 100 #26 #30 90 #29 80 #27 Use the computed to sweep back through the tree to fill the call values in circles. For #28 - #30 use the option terms, then for nodes #28 - #30 use the recursive formula: C = q Cu + (1-4) Cd. Ignore interest Question 25 0.5 pts #25 Call Value = D Question 26 0.5 pts #26 Call Value Question 27 0.5 pts #27 Call Value = Question 28 0.5 pts #28 Call Value = Question 29 0.5 pts #29 Call Value - Question 30 0.5 pts #30 Call Value
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To solve this problem we need to evaluate the call option using the binomial tree provided The call ... View full answer
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