Question: Let S = $100, K = $95, = 30%, r =8%, T = 1, and = 0. For simplicity, let u = 1.3, d =

Let S = $100, K = $95, = 30%, r =8%, T = 1, and = 0. For simplicity, let u = 1.3, d = 0.8 and n = 2 (that is, 2 periods).

Construct the binomial tree for a European call option. Provide the option premium, , and B, for each node .

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