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solve in 30 mins i will give thumb up. Q7) (0.2%) Suppose that the volatility is 15% and that the annualized interest rate is 6%.

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solve in 30 mins i will give thumb up.

Q7) (0.2%) Suppose that the volatility is 15% and that the annualized interest rate is 6%. Construct a binomial tree with 15 periods to value a 6 month instrument. Show that the Cox-Ross-Rubinstein formula can be used for pricing of this call option. You do not need to find the arbitrage-free price of this option

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