The solution for this question is confusing.
The up move for the binomial tree is 15% and the down move is 20%.
With an initial value of 30, the first up move is 34.50 but the down move is 25.
How is the down move 25? I would think the up move would be 30 * (1.15) = 34.50 and the down move 30 * (1-0.20) = 24
bump
I’m keen to find this out as well.
Yah I believe its an error on their part. Don’t get held up from it…from I learned from level 1 the CFA team that does edits and checks really needs to do a better job of checking their mocks and their content in the book for mistakes.
It sounds as though someone goofed.