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The current exchange rate is 1.50/1.00. Suppose the exchange rate can increase to 2.40/, or decrease to 0.9375/1.00, in one year. Use the binomial option
The current exchange rate is 1.50/1.00. Suppose the exchange rate can increase to 2.40/, or decrease to 0.9375/1.00, in one year. Use the binomial option pricing model to find the value of a call option on 10,000 with a strike price of 15,000 expiring in one year. Annual interest rates are i = 3% and are i = 4%.
A. 3,243.
B. 2,500.
C. 3,373.
D. 3,275.
how to solve this question or how do I get the risk-free-rate to solve the question?
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