3. (4 points) Consider a stock index with value 2500. In a 3-month period, the stock price either goes up by 15% or down by 10%. The risk free interest rate is 1% per year with continuous compounding. The dividend yield of the index is 3% per year (continuous compounding). Compute the value of a 6-month at-the-money American call option. When could the call be early exercised? What's the value of a European call with the same strike and maturity? How much one is paying for the right to early exercise? 3. (4 points) Consider a stock index with value 2500. In a 3-month period, the stock price either goes up by 15% or down by 10%. The risk free interest rate is 1% per year with continuous compounding. The dividend yield of the index is 3% per year (continuous compounding). Compute the value of a 6-month at-the-money American call option. When could the call be early exercised? What's the value of a European call with the same strike and maturity? How much one is paying for the right to early exercise