Basic Numerical Procedures
for the Instructor
Chapter 19 presents the standard numerical procedures used to value derivatives when
analytic results are not avai1 able. These involve binomialjtrinomial trees , Monte Carlo
1. You purchase one September 50 put contract for a put premium of $2. What is the maximum profit that you
could gain from this strategy?
E. None of these is correct
-$200 + $5,000 = $4,800 (if the stock fa