Option Valuation- American Put Option using Binomial Tree
Not what you're looking for?
A stock price is currently $50. Over each of the next two 3-month periods it is expected to go up by 6% or down by 5%. The risk-free interest rate is 5% per annum with continuous compounding. What is the value of a 6-month American put option with a strike price of $51?
Purchase this Solution
Solution Summary
Values an American put option using binomial tree are provided in the solution.
Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Introduction to Finance
This quiz test introductory finance topics.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.