A P G H Assignment #5 1 Consider a stock which is currently selling for $50. Construct a two-step binomial tree, 1-month and 2- months respectively for each of the two steps. The stock market volatility is 30%, the rate of interest is assumed to be 5% and the exercise price is $52. |(ij) Calculate the price of an American Put. (ii) Provide a graphical illustration to demonstrate how the put price and the put payoff change with 2 respect to changes in the stock price. (50) (50) 3