In the preceding question, the state price in the lower node after one month is equal to
A) 0.4996
B) 0.5000
C) 0.5368
D) 0.5372

Question

Quizplus · Accepted Answer

The state price in the lower node after one month can be calculated using the risk-neutral probabilities and discount factors specific to the model in question, such as the Binomial Options Pricing Model. Without the specific details of the model parameters (interest rates, stock prices, up and down factors, etc.), it's not possible to provide a detailed calculation here. However, given the options, if C is correct, it implies that the calculation based on those parameters results in a state price of 0.5368 in the lower node after one month.

In the Preceding Question, the State Price in the Lower