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Homework 4

FIN6102 Spreadsheet and VBA Modelling in Finance

Homework: Option Pricing

Write a program for option pricing that allows user to freely set all parameters about the option  and underlying stock. In addition, the program should allow user to choose: 1) Option Type: Put or Call, 2) Option Style: European or American and 3) Pricing method: Black Scholes Formula  (for European Style Only), Monte Carlo Simulation (for European Style Only), and Binomial     Tree.

Print out both your results and your simulation paths (for Monte Carlo and Binomial Tree)

Hint: Write Black Scholes formula, Monte Carlo Simulation and Binomial Tree separately. Then use a main program to call each Sub based on user’s choice of pricing method.

Here is what the interface should look like.