Binomial Model: Calculate put price

Please help with the following problem. Include calculations.

Suppose that the stock now sells at $80, and the price will go up by 5% or down by 5% at the end of first six month (t = ½). Then, the price will either go up by 10% or down by 10% at the end of year (t = 1). A call option on the stock has an exercise price of $75 and a time to expiration of one year. Also, assume 10% annual interest rate and no dividend payment for this year. Calculate the put price at t=0.

Use a two stage binominal model.

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...t rate and no dividend payment for this year. Calculate the put price at t=0.

Hello,

In the up state, the value of the put option will be 0 because it will never be exercised. Thus, you multiply 0.5 with 0, you get 0. Instead of doing that, I just ignored to take that into the calculations.

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