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What is the price of the european put

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Reference no: EM133156868

Question - The price of a stock today is $30. After every 6 months, it can either go up by a factor U = 1.25 or go down by a factor D = 0.75. The interest rate is 9% per annum, continuously compounded. Consider a European put option with a strike price of $32 and time to maturity of 1 year. Build a two-period binomial tree to find the price of the European put. What is the price of the European put?

Reference no: EM133156868

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