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Suppose S = 70, X = 65, r = 0.05, p = 0.6, Cu = 7.17, Cd = 1.22 and there is one period left
Suppose S = 70, X = 65, r = 0.05, p = 0.6, Cu = 7.17, Cd = 1.22 and there is one period left in an American call's life. What will the option be worth? Assume non-continuous compounding.
a. 6.83
b. 0.00
c. 4.56
d. 5.00
e. none of the above
ans: d (early exercise at c0)
the answer is given. can someone please help me with the steps before finals. thanks
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