The question didn’t have a down move in the reading so I’m curious how they get the .87 for D in the equation to get the call value. Did I miss something there as far as calculation for D in (1+r-D)/(U-D). They give out 1.15 as up move factor. 4% as risk free rate. strike price is 40 for 2 period call. 40 calls. european option. delta of .83 for the first period. $45 current price for stock. Any help would be appreciated. Thanks.

1/1.15 = down move.

i have the same question. no clue, I just guessed it was .85 and came close enough to guess the right answer.

a cpk to the rescue again. thanks dude.

THANK YOU!!! I got stuck looking at the question for awhile. Thanks for the help

humm, where can we get a hold of 2007 exams? just curious…

think that was a typo, it was on this years schweser exam 3

yseric Wrote: ------------------------------------------------------- > humm, where can we get a hold of 2007 exams? just > curious… Just google for it. I don’t think list some of the source is allowed here.