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A Binomial Call Option Premium Is Calculated as

Question 17

Multiple Choice

A binomial call option premium is calculated as


A) C0 = [qCuT + (1 - q) CdT] / (1 + r$)
B) C0 = [qCdT + (1 - q) CuT] / (1 + r$)
C) C0 = [qCuT + (1 - q) CdT] / (1 - r$)
D) C0 = [qCdT + (1 - q) CuT] / (1 - r$)

Correct Answer:

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