Question

Let S = $70, K = $65, r = 6% (continuously compounded), d = 1%, s...

Let S = $70, K = $65, r = 6% (continuously compounded), d = 1%, s = 30%, and T = 2. What are the appropriate values of u and d to build a 3-period binomial stock price tree? (Use the formulas from the main part of the chapter and lecture notes, not the alternative formulas in the appendix.)

EDIT: This question does not need anymore information, everything I have written is all that was provided.

Please do not answer with Excel. Correct answer was u = 1.3209 and d = .8093

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