Question: Question 1 (1 point) The next few questions test your understanding of binomial model in L14. Current stock price is 100, which can increase to

 Question 1 (1 point) The next few questions test your understanding

Question 1 (1 point) The next few questions test your understanding of binomial model in L14. Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. a) Compute u and d. (u, d) = ... (1,1) O (1.1,0.9) (0.9,1.1) O (2,0.5) Question 2 (1 point) Current stock price is 100, which can increase to $110 or decrease to $90. Risk free rate is 5%. b) Consider a call with strike $95 that expires after one period. What are the payoff of this call in good (110) and bad states (90)? (good, bad) = ... O (10,0) O (110,90) O (15,0) O (15,-5)

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