Question: Question 5 THANK??? Beta (?) changes in the underlying price (25 points per year. ) A stock index is currently valued at $50, and its

Question 5 THANK???

Question 5 THANK??? Beta (?) changes in the underlying price (25 points

Beta (?) changes in the underlying price (25 points per year. ) A stock index is currently valued at $50, and its return has a volatility of 30% The continuously compounded risk-free interest rate is 2.5% per year. 5. a). (5 points) Use a binomial model with two steps to describe the evolution of stock prices for the next two months. Specify the stock price at each node in the binomial tree above. b). (10 points) Determine the price of a European call option with two months maturity and a strike price of $55. c). (2 points) What is the delta at node B for this call option? d). (8 points) Determine the price of an American put option with the same strike price and time to maturity. And what's the put option's delta at node A

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