2. Finance
3. an asset has the current spot price at dollar100 in...

# Question: an asset has the current spot price at dollar100 in...

###### Question details

An asset has the current spot price at $100. In the future, assuming there is only two cases happen with the spot price, the price will increase to$120 or decrease to \$80. Risk free rate is 3.45% per period. Apply one period binomial model to estimate the fair value of options on this asset.

I learned this model but do not know how to apply, please do this example to demonstrate for me.