part 1, 3, 4, and 6. will give thumbs up

Intro The current level of a broad stock market index is 1,215. Its dividend yield is 3% and the standard deviation of index returns is 20%. An American call option on the stock has a strike price of $1,220 and expires in 0.4 years. The risk-free rate is 4% (annual, continuously compounded). Value the option using a binomial model with 2 periods of length 0.2 years each. Attempt 2/5 for 10 pts. Part 1 What is the value of d, the down-movement factor? 2+ decimals Submit Attempt 1/5 for 10 pts. Part 2 What is the risk-neutral probability of an up movement? 495 Correct e(t - 8). At d p= e(0.04 -0.03) -0.2 - 0.914 1.094 - 0.914 = 0.4888 ud Part 3 Attempt 175 for 10 pts. What is the option payoff in 0.4 years if the stock price went up twice in a row? 0+ decimals Submit Part 4 Attempt 2/5 for 10 pts. What is the value of the option in 0.2 years if the stock price has gone up once? 0+ decimals Submit Part 5 - Attempt 1/5 for 10 pts. What is the value of the option in 0.2 years if the stock price has gone down once? 0 Correct max CA (e-r: A'(pCdx + (1 - p)Cad), Se-K) = max (e-0.04-02 (0.4888 - 0 +0.511.0), 1,215 -0.914 - 1,220) =0 Part 6 What is the current value of the option? Attempt 2/5 for 10 pts. 0+ decimals Submit