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Consider a two-step binomial tree, where a stock that pays no dividends has a current price of 100, and at each time step can increase

Consider a two-step binomial tree, where a stock that pays no dividends has a current price of 100, and at each time step can increase by 10% or decrease by 5%. The annually compounded interest rate is 7%. 

 Plot the binomial tree to describe this problem. 

 Calculate the price of a two-year 101-strike European call using a replication argument. 

 Calculate the price of a two-year 101-strike European call using risk neutral pricing. 

  What is the price of a two-year 101-strike European put?

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