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suppose you have a three-step binary model. the current stock price is $40. in each step, the stock price can go up or down by 10 percent. the default interest rate is 12 percent and the strike price is $42. consider the Bermuda put-option: the holder has the option to exercise at n= 1 or n=3. what is the price of the option?.

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suppose you have a three-step binary model. the current stock price is $40. in each step, the stock price can go up or down by 10 percent. the default interest rate is 12 percent and the strike price is $42. consider the Bermuda put-option: the holder has the option to exercise at n= 1 or n=3. what is the price of the option?

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  • 1. suppose you have a three-step binary model. the current stock price is $40. in each step, the stock price can go up or down by 10 percent. the default interest rate is 12 percent and the strike price is $42. consider the Bermuda put-option: the holder has the option to exercise at n= 1 or n=3. what is the price of the option?