Chapter 26 - Pricing Options
413 The probabilities in the four period binomial model should be
1/16
1/4
3/8
1/4
1/16

so that the probabilities sum to 1.00
424 Question 26-6 D. should read:

What premium should you be willing to pay for the 91 day put option on HR?

431 Paragraph 3.
The differences between the payment amounts go to the intermediary. The dollar payment is paid by Airlease. On a principal of $9 million Airlease must pay 6.3% and Boeing receives 5.0%. The remaining 1.3% goes to the intermediary. The euro payment is paid by Boeing. On a principal of 10 million Boeing must pay 11.90% and Airlease receives 13.00%. The 1.1% difference must be made up by the intermediary.