Use a two period binomial tree to price a 8 month American style call on on TFS struck at $8. The spot price of TFS is $8.00 and it pays no Hends. Assume u = 1.05134, d = 0.92810, and r = 9.00%. 30.74 $0.66 $0.49

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Q8: Use a two period binomial tree to price a 8 month American style call
option on TFS struck at $8. The spot price of TFS is $8.00 and it pays no
dividends. Assume u =
1.05134, d
0.92810, and r
9.00%.
A) $0.74
B) $0.66
C) $0.49
Transcribed Image Text:Q8: Use a two period binomial tree to price a 8 month American style call option on TFS struck at $8. The spot price of TFS is $8.00 and it pays no dividends. Assume u = 1.05134, d 0.92810, and r 9.00%. A) $0.74 B) $0.66 C) $0.49
D) $0.71
E) $0.55
Transcribed Image Text:D) $0.71 E) $0.55
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