Homework Answers
Correct answer: Cannot be determined
To calculate Call price under Binomial model we need following infomation:
- Up factor or Up price for each step
- Down factor or Down for each step
- Risk neutral probability for up and down
- Risk free rate
In given case, Risk free rate is not given, thus we can not determine the call price.
Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.
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