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What is the price of a call that expires in two periods

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Binomial Pricing

1. Using a non-arbitrage argument price a put option with strike $80 on a stock that sells for $70 and will be selling for either $85 or $75 in one year. The risk free rate is 10%.

2. Stock price S = 80 Strike price K = 85 Stock price in one period either 92 or 76. Risk free interest rate = 5%.

What is the price of a call that expires in two periods?

What is the price of a put that that expires in two periods?

Reference no: EM131730236

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