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NBCT stocks current price is $100, over the next 3 years, the stock price will either increase 60% or decrease 37.5% each year. The risk-free
NBCT stocks current price is $100, over the next 3 years, the stock price will either increase 60% or decrease 37.5% each year. The risk-free rate of return is 6% per year. NBCT stock pays 35% dividends per share and the ex-dividend date is at year 1. There is one option with exercise price = $100 and maturity = 3 years. Please use 3-time period binomial model to calculate the option price as of today for the following cases:
(1) Suppose it is European call option. (2) Suppose it is European put option.
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