Question: Let S = $75, r = 7% (continuously compounded), d = 5%, s = 25%, T = 1.5. In this situation, the appropriate values of

Let S = $75, r = 7% (continuously compounded), d = 5%, s = 25%, T = 1.5. In this situation, the appropriate values of u and d are 1.26050 and 0.81750, respectively. Using a 2-step binomial tree, calculate the value of an $80-strike American put option. PLEASE SHOW ALL YOUR WORK, NO Excel, thank you :)

Answers:	a. $9.462
	b. $11.473
	c. $10.509
	d. $10.426(CORRECT)
	e. $9.97

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