Question
Suppose that you can borrow money at 22% but invest (lend) at only 18%. Using a one- period binomial tree with u = 1.30
Suppose that you can borrow money at 22% but invest (lend) at only 18%. Using a one- period binomial tree with u = 1.30 and d = 0.90, compute the prices of a call and a put both with strike price X = 75 on a stock with So = 75. How would your answer change if the borrowing and lending rates were equal?
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Calculus
Authors: Ron Larson, Bruce H. Edwards
10th Edition
1285057090, 978-1285057095
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