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2. Assume that a stock model has u=1.2,d=0.8,p=0.6, and we know that E[S2]= 27. 15. Find S0 and all possible values for S1 and S2.
2. Assume that a stock model has u=1.2,d=0.8,p=0.6, and we know that E[S2]= 27. 15. Find S0 and all possible values for S1 and S2. 3. If a stock model happens to have the parameters u=1.134,d=0.8,p=0.6, and S2=6.38,4.52, or 3.2, then when the nodes of the stock tree are filled in, we obtain the original stock prices. Explain why this is true. 2. Assume that a stock model has u=1.2,d=0.8,p=0.6, and we know that E[S2]= 27. 15. Find S0 and all possible values for S1 and S2. 3. If a stock model happens to have the parameters u=1.134,d=0.8,p=0.6, and S2=6.38,4.52, or 3.2, then when the nodes of the stock tree are filled in, we obtain the original stock prices. Explain why this is true
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