Question: 3. Option Pricing a) Using a Binomial pricing model with 1-month steps, find the price of a 3-month American Call and a 3-month American Put

3. Option Pricing a) Using a Binomial pricing model with 1-month

3. Option Pricing a) Using a Binomial pricing model with 1-month steps, find the price of a 3-month American Call and a 3-month American Put option with the following details: So 81 Strike Price 80 %Change Up/Down (per month) 5% APR (semi-annual Compounding) 2.0% b) According to the Binomial model in part a), is it optimal to exercise either of the options early? If so, when? 3. Option Pricing a) Using a Binomial pricing model with 1-month steps, find the price of a 3-month American Call and a 3-month American Put option with the following details: So 81 Strike Price 80 %Change Up/Down (per month) 5% APR (semi-annual Compounding) 2.0% b) According to the Binomial model in part a), is it optimal to exercise either of the options early? If so, when

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