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Modify your formulas from (1) to compute the price at time 0 of an American put option with the same contract speci cations in the binomial model. Report the price of the American put option under the binomial model.
Compute x(1); y(1) i.e., the number of shares of the stock and risk-free asset needed at time 0 to replicate the American option over the rst time-step.
Identify which nodes (if any) prior to the terminal date T = 1 are optimal exercise points. In other words, identify the points on the binomial tree, if any, where early exercise is optimal. It is enough to simply highlight these nodes on a visual representation of the stock or option price binomial tree.
Report the early exercise premium for the American put option, i.e., compute PA PE. This is the cash value associated with the ability to exercise early.
Lorenz Curve It is a graphic method of measuring dispersion. This curve was devised by Dr. Max o Lorenz a famous statistician. He used this technique for wealth it i
Binomial Distribution Binomial distribution was discovered by swiss mathematician James Bernonulli, so this distribution is called as Bernoulli distribution also, this is a d
Applications of Standard Error Standard Error is used to test whether the difference between the sample statistic and the population parameter is significant or is d
method of least square
Example of discrete random variable: 1. What is a discrete random variable? Give three examples from the field of business. 2. Of 1000 items produced in a day at XYZ Manufa
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Among the students doing a given course, there are four boys enrolled in the ordinary version of the course, six girls enrolled in the ordinary version of the course,and six boys e
Ask question #Minimum The data in the accompanying table give the weights? (in g) of randomly selected quarters that were minted after 1964. The quarters are supposed to have a med
The data used is from a statistical software Minitab; London.MPJ is the file that consists of 1519 households drawn from 1980 - 1982 British Family Expenditure Surveys. Data that i
Andrews ‘Plots A graphical display of multivariate data in which an observation, x0 = [x1, x2, . . . , xq] is represented can be represented in the form of function A set
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