1. A stock price is $50 now. In one month it can go 10% up or down. In the second month it can go 10% up or down. The annual interest rate is 10% with continuous compounding. Use risk-free portfolios to determine the value of:
   1. A two-month European call with strike price 50
   2. A two-month European call with strike price 51
2. Use risk-neutral valuation to calculate the probabilities in the model that will give you the correct call prices in the previous problem parts a) and b).