Question
1.2.You have a stock in the one-period binomial model such that S0= 4, S1(H) = 8, S1(T) = 2,and r= 1.5. 1.3.With the same stock
1.2.You have a stock in the one-period binomial model such that S0= 4, S1(H) = 8, S1(T) = 2,and r= 1.5.
1.3.With the same stock as in problem 1.2 but with r= 0.25, give the price of both a 1-periodstrike-$6 callCand a 1-period strike-$6 put P.What do you notice about the security with payoff C1P1?
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Mathematics For Business
Authors: Stanley A Salzman, Charles D Miller, Gary Clendenen
8th Edition
0321357434, 9780321357434
