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Suppose you are attempting to value a 1-year maturity option on a stock with volatility (i.e.,annualized standard deviation) 0100.42 a. 1 period of 1 year
Suppose you are attempting to value a 1-year maturity option on a stock with volatility (i.e.,annualized standard deviation) 0100.42 a. 1 period of 1 year b. 4 subperiods, each 3 months. c. 12 subperiods, each 1 month. What would be the appropriate values for u and d if your binomial model is set up using: (Do not round intermediate calculations. Round your answers to 4 decimal places.) a. 1s b. C. 4 12 1/4-0.25 1/12=0.0833
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