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Just need number 2 please consider a call option for an asset with the following parameters:
-current spot price is $50
-option expires in 12 months
-each month the asset could increase in value by 3% or decrease in value by inverse
-the risk rate is 25 basis points per month -So=$50, T=12, U=1.03, R=1.0025
1. What is the formula for the delta of the option as a function of (U,D,R,Vu,Vd)?
2. Determine the terminal distribution of the asset price?
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