Q$4(25$ points$)$: $($Convergence analysis of call option premium$)$:

Objective: Analyze how closely the call option premiums calculated using the flexible binomial model

align with those derived from the Black$-$Scholes model as the number of periods increases.

Instructions:

$($a$)$ In your EXCEL report, present $N,a,B(ja$;$N,q),N(d_1),B(ja$;$N,p),N(d_2),$ the option price from the

N$-$period flexible binomial model, the BS model price, and the price difference $($i$.$e$.,$ flexible binomial price

BS model price$)$ from various N$-$period flexible binomial models. Report non$-$integers with three decimal

places.

$($b$)$ Plot a graph with $x=$ the number of periods $N($an even number$)$ and $Y=$ price difference$*1,000.$

This scaling helps in detecting subtle variations in option pricing convergence across different models.