Question: post all the steps Let S = $40, K = $30, r = 7% (continuously compounded), d = 5%, s = 40%, and T =

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Let S = $40, K = $30, r = 7% (continuously compounded), d = 5%, s = 40%, and T = 1.5. What are the appropriate values of u and d to build a 2-period binomial stock price tree? (Use the formulas from the main part of the chapter and lecture notes, not the alternative formulas in the appendix.)

	a.	u = 1.4354; d = 0.7179
	b.	u = 1.1856; d = 0.7639
	c.	u = 1.2861; d = 0.7775
	d.	u = 1.0708; d = 0.6382
	e.	u = 1.2373; d = 0.9175

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