Use the binomial option pricing model to price a call option The option has a maturity of one year and a strike price of $95 125 The current one year rate is 3 and it could either go up 100bp or down to 50bps from the one year rate Each rate has a 50 50 chance of occurring Your answer should be in dollars out two decimal points (ie $X XX) use the excel like this Time 0 0 1 0 11 0 1 0 09 100 90 09 S Price Today 82 65 100 91 74 100 $ X $ 91 00 $ 0 34 $ 0 74 Time 0 0 1 0 11 0 1 0 09 100 90 09 S Price Today 82 65 100 91 74 100 $ X $ 91 00 $ 0 34 $ 0 74

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Question: Use the binomial option pricing model to price a call option. The option has a maturity of one year and a strike price of $95.125.

Use the binomial option pricing model to price a call option. The option has a maturity of one year and a strike price of $95.125. The current one year rate is 3% and it could either go up 100bp or down to 50bps from the one year rate Each rate has a 50-50 chance of occurring. Your answer should be in dollars out two decimal points (ie. $X.XX)

use the excel like this Use the binomial option pricing model to price a call option.

Time 0 0 1 0.11 0.1 0.09 100 90.09 S: = Price Today 82.65 100 91.74 100 $ - X:= $ 91.00 $ 0.34 $ 0.74 Time 0 0 1 0.11 0.1 0.09 100 90.09 S: = Price Today 82.65 100 91.74 100 $ - X:= $ 91.00 $ 0.34 $ 0.74

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