Create a binomial tree with steps

Reference no: EM131964316

Question: Create a binomial tree with 3 steps. The sample tree you got has 2 steps. For stock prices, assume the current price is $25 and increase/decrease it by 15% by each step. This process is also done in the sample tree, for 2 steps. Calculate the price of call option with a strike price of $25 using your 3-step tree. Risk free rate is 5% and the option has 1 year to maturity. (You don't need to show the whole tree to answer. Just the answer is fine for this assignment.)

Reference no: EM131964316

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