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Counseder a stock worth $30 that can go up or down by 10%. the risk- free rate is 6% the exercise price is $30 a) find the value of the call option today considering one period binomial? b) construct a hedge by combing a position in stock with position in the call show the turn on hedge is the risk-free rate regardless of the outcome, assuming that the call of the value that you obtained in part a, assuming one- period binomial? c) Find the value of the call option today considering a two-period binomial? d) Find the value of put option today considering a two- period binomial?

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Financial Management, Finance

Category:- Financial Management
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