2. Consider the three-period binomial model with a non-dividend paying stock S, where So = 4, u = 2, d = 0.5,7 = 0.25. Your boss has asked you to price a European put option which expires at time N = 3 and has strike K = 1. The payoff of the put option at N is v (Put, Euro) ;= max {K - Sn,0}. (1) Do you use a node, or path-based, approach? Please explain. (10 pts.) Compute the pair (v/Pur, Patro), 40). (40 pts.) 2. Consider the three-period binomial model with a non-dividend paying stock S, where So = 4, u = 2, d = 0.5,7 = 0.25. Your boss has asked you to price a European put option which expires at time N = 3 and has strike K = 1. The payoff of the put option at N is v (Put, Euro) ;= max {K - Sn,0}. (1) Do you use a node, or path-based, approach? Please explain. (10 pts.) Compute the pair (v/Pur, Patro), 40). (40 pts.)