Use a two period binomial tree to price a 12 month European style put On on YMMV struck at $16. The spot price of YMMV is $15.25 and it = no dividends. Assume u/d = 4/3, Pup = 1/3, and r = = 9.75%. $1.25 $0.96 $0.72 $0.58 $1.30

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Q3: Use a two period binomial tree to price a 12 month European style put
option on YMMV struck at $16. The spot price of YMMV is $15.25 and it
pays no dividends. Assume u/d= 4/3, Pup = 1/3, and r =
- 9.75%.
|3D
A) $1.25
B) $0.96
C) $0.72
D) $0.58
E) $1.30
Transcribed Image Text:Q3: Use a two period binomial tree to price a 12 month European style put option on YMMV struck at $16. The spot price of YMMV is $15.25 and it pays no dividends. Assume u/d= 4/3, Pup = 1/3, and r = - 9.75%. |3D A) $1.25 B) $0.96 C) $0.72 D) $0.58 E) $1.30
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