Cumulative probability of final node

Reference no: EM132459131

A non-dividend paying stock, currently priced at 250, is expected to go up by 30% or go down by 20% over a period. The risk free rate for one period is 2%. Price a call option with X=280 using the formula with factorials for 3 periods. No need to build a binomial tree. In your answer report the 3rd period call values, the cumulative probability of each final node, and the number of paths you can get to each outcome. Do the same for a put with X=$280.

Reference no: EM132459131

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