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A stock index is currently trading at 50. Paul Tripp, CFA wants to value 2-year index options using the binomial model. The stock will either
A stock index is currently trading at 50. Paul Tripp, CFA wants to value 2-year index options using the binomial model. The stock will either increase in value by 20% or fall in value by 20%. The annual risk-free interest rate is 6%. No dividends are paid on any of the underlying securities in the index. Confirm that your solutions for the values of the call and the put if they satisfy put-call parity.
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