Question: PLEASE SHOW THE MATHNOT THE EXCEL!! Problem 9 (Binomial option pricing). Suppose that The current price of MKN corporations common shares is S0 = $50

PLEASE SHOW THE MATHNOT THE EXCEL!!

Problem 9 (Binomial option pricing). Suppose that The current price of MKN corporations common shares is S0 = $50 MKN doesnt pay dividends The yield curve is flat at 10% Over the next year the stock of MKN will either go up by 40%, or go down by 10% (a) What is the replicating portfolio for a one-year at-the-money call on MKN? What is the call worth? (b) What is the replicating portfolio for the at-the-money put? Whats it worth?

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