Suppose that Stock XYZ is currently trading at $80 and does not pay any dividends. Using a Cox-Ross-Rubinstein binomial tree with two periods, we would like to price a European down and out put option written on this stock with a strike price of $85, barrier level of $75. Assume that the binomial tree parameters are: u = 1.07, and e-r4t = 0.99. Find the price of the barrier option. 6.33 4.98 1.21 3.88

Suppose that Stock XYZ is currently trading at $80 and does not pay any dividends. Using a Cox-Ross-Rubinstein binomial tree with two periods, we would like to price a European down and out put option written on this stock with a strike price of $85, batrier level of $75. Assume that the binomial tree parameters are: u=1.07;andert=0.99. Find the price of the barrier option. 6.33 4.98 1.21 3.88 Suppose that Stock XYZ is currently trading at $80 and does not pay any dividends. Using a Cox-Ross-Rubinstein binomial tree with two periods, we would like to price a European down and out put option written on this stock with a strike price of $85, batrier level of $75. Assume that the binomial tree parameters are: u=1.07;andert=0.99. Find the price of the barrier option. 6.33 4.98 1.21 3.88