Question: Consider the 3-period binomial model with S = 100, u = 2, d=1/2 and r = 1/4. a. What is the current price of a

Consider the 3-period binomial model with S = 100, u = 2, d=1/2 and r = 1/4.

a. What is the current price of a lookback call option with a strike price of $100 that pays off (at time three)

V = (max[ ] S-100)

b. What is the time-zero price of a lookback put option with a strike price of $100 that pays off (at time three)

V = (100 - min[ ] S)

c. What is the time-zero price of an Asian call option with a strike price of $100 whose payoff (at time three is

V = (1/4Y - 100)

where Y = [k=0,n-3] S is the sum of stock prices between time 0 and time 3.

(Please be clear in your steps. I'm having trouble understanding these problems. They seem simple but I can't seem to connect the dots)

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