Please answer all questions and provide step by step solution for each question, provide explanation of the formulas used to obtain your spread-sheet outputs, plots, tables and spreadsheet data which are clearly la-belled (e.g., where appropriate include the question num-ber, title, parameter names, axis labels, clearly identified final solutions (e.g., if asked to calculate a premium, then do not just present a binomial tree which calculates the premium; instead clearly identify the answer with "The premium is $..."); all numerical results correct to at least four significant figures (unless otherwise specified). Use excel to answer questions and show the PDF outputs of Excel. ALSO PLEASE SHARE THE GOOGLE SHEETS LINK SO I CAN CHECK THE EXCEL WORK SOLUTIONS IN DETAIL. thanks

1. A European call written on shares has strike price $12 and expires in six time steps. Using CRR notation, the underlying share prices are calculated using S = $15, u = 1.25 and d=1/u. The return on a bank investment over each time step is R = 1.04. (a) (b) (c) (d) (e) Plot the value of this European call at expiry for different share prices. Construct a six-step binomial pricing tree for the underlying asset. Recall that we can use the binomial asset pricing model when we assume no arbitrage. Use this fact to explain why it is possible to use the binomial asset pricing model in this case. Find the premium of the call by calculating the risk neutral probabilities and then constructing a six-step binomial pricing tree. Use put-call parity to find the premium of a European put with the same underlying asset, strike price and expiry as the European call. [8 marks]