QUESTION 3 In the binomial tree with a given up and down movement of u and d with probabilities p_u and p_d, respectively, we calculated the probability that the stock will move up exactly k out of n times as: -(Rp.pa kn- k Which of the following is true (and why is this important)? k n-k QUESTION 10 A share is currently trading at $100 with an annual (365 days) volatility of 40%. Assume that interest rates are 0% over the next 20 days. Using three steps in a binomial tree (with the property that the the share price returns to where it started if an up movement is followed by a down movement), calculate the price of a European Call option with strike of $90 an expiry in 20 days. As always chose the answer that is closest to your own calculations. 10 10.32 10.62 O 11.06 QUESTION 3 In the binomial tree with a given up and down movement of u and d with probabilities p_u and p_d, respectively, we calculated the probability that the stock will move up exactly k out of n times as: -(Rp.pa kn- k Which of the following is true (and why is this important)? k n-k QUESTION 10 A share is currently trading at $100 with an annual (365 days) volatility of 40%. Assume that interest rates are 0% over the next 20 days. Using three steps in a binomial tree (with the property that the the share price returns to where it started if an up movement is followed by a down movement), calculate the price of a European Call option with strike of $90 an expiry in 20 days. As always chose the answer that is closest to your own calculations. 10 10.32 10.62 O 11.06