I'm self-studying for an actuarial exam and I encountered the following problem:
The true probability of an up move, $p$, must satisfy: $$p = \frac{e^{{(\alpha - \delta})h} - d}{u - d},$$
where $\alpha$ is the continuously compounded annual expected return of the stock and $\delta$ is the continuous dividend rate.
But with $\alpha = 0.10$, $\delta = 0.03$, $u = 1.04$, and $d = 0.91$, we have $$p = \frac{e^{{(0.10 - 0.03})1} - d}{1.04 - 0.91} = 1.25,$$ which doesn't seem possible since I thought $0 \leq p \leq 1$.
How should I interpret this value of $p$ in terms of a probability, since $p > 1$?