1 consider the following binomial option model stock price, Ask an Expert

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1. Consider the following binomial option model. Stock price is 10 dollars now. In 1 year it can go to 12 dollars or 8 dollars. Interest rate with annual compounding is 10 percent. What is the price of a 1 year call with strike 11. SHOW CALCULATION STEPS

2. What are the parameters affecting European call price on a non dividend paying stock? What happens to the call price when one of these parameters changes with all the others remaining the same? Make the table.

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Financial Management, Finance

Category:- Financial Management
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