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Assume that risk free rate r = 0.12, the price of the IBM stock is...

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Accounting

Assume that risk free rate r = 0.12, the price of the IBM stock is $100 per share now. Suppose the price of the IBM stock can go up or down by 20% (u = 1.2, d = 0.8), for every two months. Use the 3-periods binomial tree model to price the European and American call options, with striking price = $ 100, maturity = 6 months, and the IBM stock as the underlying asset.

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