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  3. b) the current share price of siemens is s_0 =87 e

b) The current share price of Siemens is S_0 =87 EUR. Let us assume that...

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Accounting

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b) The current share price of Siemens is S_0 =87 EUR. Let us assume that the share price can either rise by only 8% or fall by only 10 % within the next both months. Please use a 2-period-tree to calculate the value of the option assuming an American styled option with a strike price X of 87 EUR and a riskless interest rate of 5% p.a. and a pay-off profile at maturity of [max(s, - X, 0)] with Sdenotes the share price at maturity. Does it make sense to exercise the option before maturity

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