3.(13 points] Consider a three-step CRR model with d=0.7, r = 5%, S(0) = $72, u = 1.1. (a) (2pts) Draw the stock price S. (b) (5pts) Determine the pricing tree of an American put option with strike K = $72 and mark all the nodes where the option is executed, i.e. Fy = f(S.). (c) (3pts) Determine the position in stocks required for hedging at each node when the option is not executed. Why is this enough to determine the replication strategy? (d) (3pts) Assume a buyer executes at Sdd. Do you expect a profit? Is this an arbitrage