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Tu + (1 – n)d = 1+r, ne underlying asset at the up node ne underlying asset at the down nod

Tu + (1 – n)d = 1+r, ne underlying asset at the up node ne underlying asset at the down nod

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Hello

can you show how PI (probability) is derived . Can you show the math behind solving for pi?

Tu + (1 - n)d = 1+ r; where r, = risk-free rate u - 1 + per-period rate of return of the underlying asset at the up node d = 1 + per-period rate of return of the underlying asset at the down node. When rearranged, this says 1 + r; - d T = - (7.4) u- d
Transcribed Image Text:Tu + (1 - n)d = 1+ r; where r, = risk-free rate u - 1 + per-period rate of return of the underlying asset at the up node d = 1 + per-period rate of return of the underlying asset at the down node. When rearranged, this says 1 + r; - d T = - (7.4) u- d
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