Binomial tree model for a stock price

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In a 1-period binomial tree model for a stock price, S0 = 20, u = 1.06, d = 0.96, and r = 0.02 effective annual. There are no dividends. Note: T is omitted on purpose. If the price of a European Call option with K = 20 is $1.00: i) What is the risk-neutral probability ”q” of the stock to go up? ii) Using part (i), find the premium of a Put option with K = 20.5.

Reference no: EM131182511

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