NBCT stock's current price is $100, over the next 3 years, the stock price will either increase 60% or decrease 37.5% ea

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answerhappygod
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NBCT stock's current price is $100, over the next 3 years, the stock price will either increase 60% or decrease 37.5% ea

Post by answerhappygod »

NBCT stock's current price is $100, over the next 3 years, the
stock price will either increase 60% or decrease 37.5% each year.
The risk free rate of return is 6% per year. NBCT stock pays 35%
dividends per share and the ex-dividend date is at year 1. There is
one option with exercise price =$100 and maturity =3 years. Use
3-time period binomial model to calculate the option price as of
today for the following cases:
.1. Suppose it is European call option
2. Suppose it is European put option
3. Suppose it is American call option
4. Suppose it is American put option
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