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#1

In a two period binomial model, and assume that the option being valued is 6 months, with std deviation is 8 percent. For the initial up factor calculation the formula is Exp 0.08 srt .025. My question is why was time not calculated as .5, as this a 6 month call option? The up factor period selected is 3 months so does the calculation then mean that the first period will be half of the total time ie 6 months? Thanks

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