Price a european call and put

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Reference no: EM131540956

Price a European Call and Put and an American Put on a stock that is currently selling at $25 and has a volatility of 25%. The options all have a life of 7 months and a strike price of $26. The 7-month risk free rate is 3% per annum with continuous compounding.

a. Use a 12-step binomial tree to price all 3 options

b. Use a 13-step binomial tree to price all 3 options

c. Use the Black-Scholes-Merton formula to price the European options

PLEASE ANSWER A, B, C in EXCEL and SHOW ALL WORK/EXPLAIN

Reference no: EM131540956

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