Question: 4. You are going to use binomial trees to value American-style options on the British pound. Assume that the British pound is currently worth $1.40.

4. You are going to use binomial trees to value American-style options on the British pound.

Assume that the British pound is currently worth $1.40. Volatility is 10%. The current British risk-free rate is 5%, and the US risk-free rate is 2%. The put option has a strike price of $1.50.

It expires in 200 days. American-style options can be exercised before expiration.

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