In a One-Period Binomial Model with Su = 49

question 26

Multiple Choice

In a one-period binomial model with Su = 49.5,Sd = 40.5,p = 0.8,r = 0.06,S = 45 and X = 50,what is a European put worth?

• A)2.17
• B)0.50
• C)9.50
• D)5.00
• E)none of the above

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Definitions:

Opiate

A category of drugs derived from the opium poppy (or synthetic analogs) that primarily act as central nervous system depressants and are used for pain relief.

Amphetamines

Drugs (such as methamphetamine) that stimulate neural activity, causing accelerated body functions and associated energy and mood changes.

Barbiturates

A class of drugs that act as central nervous system depressants, historically used for sedation, anesthesia, and to treat conditions such as anxiety and insomnia.

Stimulants

Drugs (such as caffeine, nicotine, and the more powerful cocaine, amphetamines, methamphetamine, and Ecstasy) that excite neural activity and speed up body functions.