A stock of Aurora Cannabis Inc (ACB) is currently traded at $3.50 per share. Consider the price changes every 6 months.

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answerhappygod
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A stock of Aurora Cannabis Inc (ACB) is currently traded at $3.50 per share. Consider the price changes every 6 months.

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A Stock Of Aurora Cannabis Inc Acb Is Currently Traded At 3 50 Per Share Consider The Price Changes Every 6 Months 1
A Stock Of Aurora Cannabis Inc Acb Is Currently Traded At 3 50 Per Share Consider The Price Changes Every 6 Months 1 (51.75 KiB) Viewed 28 times
A stock of Aurora Cannabis Inc (ACB) is currently traded at $3.50 per share. Consider the price changes every 6 months. It is expected that the price will either increase by 70% or decrease by 20% from the previous period. 6-month risk-free rate is 5% per year. Assume that there are option contracts on ACB stock available in the market, what should be the premium of American put and call options with $5 strike price that will be expired 1-year from today, based on binomial option pricing model? Does the premium of options differ if they are European options? (25 points)
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