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Just B 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 free rate is 25 basis points per month S0 = $50, T=12, U=1.03, D=1/1.03, R=1.0025
a. Determine the terminal distribution of the asset price (hint: use binom.dist function in excel)
b. Describe the distribution (mean, standard deviation, shape, ...).
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