Question: 1. In the 1-step Binomial formula rT c-e (pmax(Su - K,0)(1-p) max(Sd - K,0 for a European call option, sketch a graph showing how c

1. In the 1-step Binomial formula rT c-e (pmax(Su - K,0)(1-p)

1. In the 1-step Binomial formula rT c-e (pmax(Su - K,0)(1-p) max(Sd - K,0 for a European call option, sketch a graph showing how c varies as strike price K changes Use this to show that c = S if and only if K = 0, [Hint: consider separately the cases

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