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Does anyone know how to answer this question? Given the maturity of an American put option 2 years, riskfree rate 10%, volatility of the stock
Does anyone know how to answer this question?
Given the maturity of an American put option 2 years, riskfree rate 10%, volatility of the stock 40%, current spot price of stock $50, strike price $50, what is the one-step risk neutral probability that stock price goes up considering a three-step binomial tree?
A) 0.201
B) 0.452
C) 0.910
D) 0.547
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