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Question on Option Valuation - Binomial Method
Consider a European put option on a non-dividend paying stock with strike price $31 and time to expiration 4 months. The stock has a current price of $30 and assume that in four months its price will be either $34 or $28. The risk-free interest rate is 3% per year.
(a) What is the price of call option?
(b) What is the price of the put option?
France and Spain will both have an increase in tourism if Belgium leaves the European Union.
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A stock's price is $100. Over each of the next two three month periods it is expected to go up by 15% or down by 10%. The risk free rate is 4% p.a. The stock pays a dividend of $1 per quarter. Assume the option expires the day before the second perio..
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