Exercise 1 (15 points) A stock S is currently valued at $100. The risk-free rate r is 8% annually, with continuous compounding. We adopt a binomial tree approach with u = 1.1 and d = 0.9. We consider two periods in the tree and the time step is 6 months. Question 1 [1 points) Build the tree with all the stock prices at each node. Question 2 [2 points) Compute the risk-neutral probability. Question 3 (4 points) Compute the current price of a European call option Con S, with maturity T=1 year and strike K=$100. Question 4 (4 points) Compute the current price of a European put option P on S, with maturity T=1 year and strike K=$100. Question 5 (2 points] Give the Put-Call parity formula for European options on a stock Question 6 [2 points) Verify that the price of P and C satisfy Put-Call parity