A binomial tree model is used to value an option on the dow, Ask an Expert

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A binomial tree model is used to value an option on the Dow Jones Industrial Average (DJIA) index. The dividend yield is 3% per annum, the index volatility is 14% per annum, the time step is 2 months, and the risk-free interest rate is 5% per annum. What is the probability of an up move? The answer is 0.5149. I want to know the process.

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Financial Management, Finance

Category:- Financial Management
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