Binomial option pricing use put-call parity to calculate, Financial Management

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Binomial option pricing use put-call parity to calculate

Binomial option pricing:

a. Use the binomial option pricing model to calculate the price of a 12 month call using the following data :

Up move expected 12%

Down move expected -6%

Initial Share Price 50.00

Risk-free Interest Rate 4%

Exercise Price 50.00

b. Use put-call parity to calculate the price of the matching put (i.e. at the same strike price).

c. What would be the price of the $55 call?

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Financial Management: Binomial option pricing use put-call parity to calculate

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Financial Management: Binomial option pricing use put-call parity to calculate

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