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Consider a 4-period binomial tree model of the American put option on the XYZ stock with K=$40 and T= 0.5 years. The current stock price
Consider a 4-period binomial tree model of the American put option on the XYZ stock with K=$40 and T= 0.5 years. The current stock price is $40 and the volatility is 20%. The annul interest rate is 8%. There is no dividend. What is the option premium from the tree? And how many early exercise nodes are there?
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Fundamentals of Futures and Options Markets
Authors: John C. Hull
8th edition
978-1292155036, 1292155035, 132993341, 978-0132993340
