572.EXPLANATIONTHE TREE WILL HAVE THREE NODAL PERIODS
103.572.
Explanation
The tree will have three nodal periods: 0, 1, and 2. The goal is to find the value at node 0. We know the value in nodal period 2: V
=100. In
2
nodal period 1, there will be two possible prices:
V
=[(100+10)/1.09+(100+10)/1.09]/2= 100.917