Question: I need help solving these stochastic calculus problems. Please see the attached file for the problems 1. 20 pts For a BAPM with N =

I need help solving these stochastic calculus problems. Please see the attached file for the problems

1. 20 pts For a BAPM with N = 3, r = .03, u = 1.05, d = .97, p = q=.5, and So = 20, determine (a) the arbitrage free price of an American option with strike K = 20. (b) the stopping times or execution strategy, i.e. when you would exercise, for this option. 2. 30 pts . Compute E[W2(s) W2(t)] for t

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