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Q1: Please select appropriate answers from choices (a) to (x) to fill in 5 blank lines to finish the VBA code for binomial pricing

(Note: Style = “euro” or “amer”, C_P = 1 for call and -1 for put, n as the number of steps, dt is the time length of each step, u is up movement multiplier, Pu is the probability of going up)

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Function binomial_all2(Style As String, C_P As Double, spot As Double, strike As Double, _

timetomaturity As Double, risk_free As Double, div As Double, _

vol As Double, n As Integer) As Double

Dim price(), S() As Double

Dim dt, u, Pu, discount As Double

Dim I, j, Arraysize As Integer

dt = timetomaturity / n

discount = Exp(-risk_free * dt)

Arraysize = ____(1)________

u = Exp(vol * dt ^ (1 / 2))

d = 1 / u

Pu = (Exp((risk_free - div) * dt) - d) / (u - d)

ReDim price(Arraysize)

ReDim S(Arraysize)

S(0) = spot * (u ^ n)

For I = 1 To n

S(I) = S(I - 1) * ___(2)____

Next I

For I = 0 To n

price(I) = Application.WorksheetFunction.Max(0#, C_P * (S(I) - strike))

Next I

For j = n - 1 To ___(3)____

For I = 0 To j

If Style = "euro" Then

price(I) = discount * (Pu * price(I) + (1 - Pu) * price(I + 1))

ElseIf Style = "amer" Then

price(I) = discount * (Pu * price(I) + (1 - Pu) * price(I + 1))

S(I) = ___(4)________

price(I) = WorksheetFunction.Max(__(5)____, C_P * (S(I) - strike))

End If

Next I

Next j

binomial_all2 = price(0)

End Function

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Choices for Q1:

(a) S(I) | (b) S(0) | (c) price(0) |

(d) u | (e)...