Economics Homework Help. University of Rochester Binomial Option Pricing Worksheet
I’m working on a finance question and need an explanation and answer to help me learn.
Binomial Option Pricing using Excel
Overview of the Assignment:
Learn how the Excel spread sheets for put options work, then create a similar spread sheet for the pricing of European call options.
Detailed Steps:
1)Download the Excel file: Binomial.xlsx containing the binomial model from MyCourses.
2)Make sure the default settings are: S=60, K=65, sigma = 20%, r = 2%, T = 2, and number of periods = 8.
3)Fill in cells in the spread sheet “European_Call” to find the call option premium.
4)Double check you answer using the put-call parity.
