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Please include the binomial tree and calculations so I can see the process, thanks! Question 6. The Square Root Inc. is facing a lawsuit and
Please include the binomial tree and calculations so I can see the process, thanks!
Question 6. The Square Root Inc. is facing a lawsuit and waiting for the court ruling. The company's stock is currently priced at $50. In three months, the stock price can be either $60 or $40, depending on the result of the court ruling. The interest rate is zero. Mr Dan Smith has an exotic option on the Square Root stock. The payoff of the exotic option is the square root of the payoff from a plain-vanilla European call option that trikes at 51 and matures in three months. The value of Mr. Dan Smith's exotic option in one-step binomial model is closest to (a) 1.50 dollars. (b) 2.00 dollars. (c) 4.50 dollars. (d) 0.00 dollarsStep by Step Solution
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