The current price of Watson Corporation stock is $10. In this year, this stock price can either
Fantastic news! We've Found the answer you've been seeking!
Question:
(a) Construct a binomial tree to show the evolvement of the stock price in this year and show the payoff of the put option. (2 marks)
(b) Calculate the risk-neutral probability based on the binomial model constructed in Part (a) (2 marks)
(c) Calculate the price of the put option using the risk-neutral binomial model.
Related Book For
Posted Date: