We determined in class that the true probability of an up or down move is “not important” for pricing options. How do you reconcile this with your answer in part d)?SusdsRfud 1) 4360301%1.400.70 continuously compunded = e^0.01 = 1.0101 E = 50p= R-dU-d q = 1-p = 0.44780.5522 cu = 10cd = 0Value of call option i.e C0 = $ 4.43 2) Risk adjusted…
True probability
This is a sample question
Need help with a similar assignment?
Place an order at Study Pirate
Attach all custom instructions.
Make Payment. (The total price is based on number of pages, academic level and deadline)
We’ll assign the paper to one of writers and send it back once complete.