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It will great if I can have some help with this 1. (a) Find a stock that does not pay a dividend. Estimate the price
It will great if I can have some help with this
1. (a) Find a stock that does not pay a dividend. Estimate the price of a 4 or 5 month call option using binomial pricing and the Cox, Ross and Rubinstein method of finding u and d: ure PONA d =1/u = eV Assume At = 1/12, r= .005 and that the volatility of the stock equals .40 (b) Estimate the price of a 4 or 5 month put option using binomial pricing and the Cox, Ross and Rubinstein method of finding u and d. Also, assume At = 1/12 and that the volatility of the stock is.40 (c) Compare your results to the actual bid-ask midpoints. Why are they different? Which do you think is the most accurate? 1. (a) Find a stock that does not pay a dividend. Estimate the price of a 4 or 5 month call option using binomial pricing and the Cox, Ross and Rubinstein method of finding u and d: ure PONA d =1/u = eV Assume At = 1/12, r= .005 and that the volatility of the stock equals .40 (b) Estimate the price of a 4 or 5 month put option using binomial pricing and the Cox, Ross and Rubinstein method of finding u and d. Also, assume At = 1/12 and that the volatility of the stock is.40 (c) Compare your results to the actual bid-ask midpoints. Why are they different? Which do you think is the most accurateStep by Step Solution
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