What is the price of an American-style call option assuming a 2% annual risk free drift, a strike price of 100 with 2 years to maturity. In each year the price can either rise by a foactor of 2 or fall by a foctor of 0.3. The current price an underlying asset that pays no dividends is $100.
what do they mean by "assuming a 2% risk free drift" what's a drift?
what do they mean by "assuming a 2% risk free drift" what's a drift?