Question: 1.1. Suppose that So = 4, r = 0.1, u=2, d=0.5, and p=0.2. (a) Calculate the expected value of Si/So using the physical probabilities. (b)

1.1. Suppose that So = 4, r = 0.1, u=2, d=0.5,

1.1. Suppose that So = 4, r = 0.1, u=2, d=0.5, and p=0.2. (a) Calculate the expected value of Si/So using the physical probabilities. (b) Calculate the expected value of Si/So using the risk-neutral probabilities

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