A binomial tree model is used to value an option on the dow, Finance Basics

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A binomial tree model is used to value an option on the dow

Question: A binomial tree model is used to value an option on the Dow Jones Industrial Average (DJIA) index. The dividend yield is 3% per annum, the index volatility is 14% per annum, the time step is 2 months, and the risk-free interest rate is 5% per annum. What is the probability of an up move?

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Finance Basics: A binomial tree model is used to value an option on the dow

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Finance Basics: A binomial tree model is used to value an option on the dow

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