Solution 1: From the problem U = 27/25 =1.08d = 23/25 = 0.92, the rising probability P = (e (10% * 2/12)-0.92)/(/kloc-0).

After two months, the price of the derivative product is 529 (if the stock price is 23) or 729 (if the stock price is 27). Therefore, the purchase price is equal to c = (729 * 0.6050)/(1+10% * 2/12)+0.3950 * 529/(1+10.

Option 2: Consider the following trading portfolio: +△: stock-1: After two months of derivative products, the portfolio value is 27△-729 or 23△-529. If 27△-729=23△-529 is △=50, the combined value must be 62 1, and it is risk-free. The present value of the portfolio is 50×25-f, where f is the price of the derivative product. Because the portfolio yield is equal to the risk-free interest rate, (50× 25-f) e 0.10× 2/12 = 621,that is, F = 639.3. Therefore, the price of derivative products is $639.3.