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Problem 5. (4 points ] Let S(0) = 50, R = 0.5%, U = 10%, K = 51 and D= -10%. Assume that the stock
Problem 5. (4 points ] Let S(0) = 50, R = 0.5%, U = 10%, K = 51 and D= -10%. Assume that the stock price follows a binomial model with N = 2. Find the price P(0) of an European s(2): S(!) i S0] exotic put option with the payoff P(2) = [K 3
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