Assignment 4

Due Sun, Nov 10 at 11:59 pm

Up and down states, as well as risk-free rates, are often represented in two ways - net (such as 0.10 or 10%) and gross (such as 110% or 1.10). To do the calculations, the gross term is appropriate. Keep this in mind as you do the assignment.

Deliverables are highlighted. Nothing else needs to be turned in (no write-up).

Instructions:

1)Complete the binomial trees for stock price, bond value,Europeancall, andEuropeanput. No early exercise option.

2)Complete the bordered table. Make sure you're using the right number of states.

3)Everything you need for a reference is on the excel Sheet from Week 10 ("Copy of FM4, Chapter 16, binomial").

*Link to Excel Workbook: please ask swright2410 @ gmail.com*