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Medium · Options & Greeks · Quant Trader interview question · binomial-tree, risk-neutral-probability, options, probability, expected-value
A stock is currently trading at 100 dollars. Over the next period, it is expected to either increase to 110 dollars or decrease to 90 dollars. The risk-free rate is 5% per period. Assuming no dividends, calculate the risk-neutral probability of the stock price increasing.