Please offer a step by step answer, thank you. 2. Consider the following data (interest rate is per period): 1. 11. 111. 100; K =

Please offer a step by step answer, thank you.

<_j consider the following data rate is per period sg-h ii. iii. s="100;K=;R=1.20;u=" what binomial price of a european call option with two periods until expiration an american same strike and time to there ever early exercise show that for put go can you conclude from difference in prices alone may be optimal when it use your answers verify put-call parity holds options but not optionsj>

2. Consider the following data (interest rate is per period): 1. 11. 111. 100; K = 75 ; R = 1.20 1.5 .5.e What is the binomial price of a European call option with two periods until expiration? What is the price an American option with the same strike price and same time to expiration? Is there ever early exercise?e Show that the binomial option price for a European put option with two periods to go until expiration is 3.125. Show that the binomial price for an American put is 6.25. Can you conclude from the difference in prices alone that early exercise may be optimal? When is it Use your answers to (i) and (ii) to verify that put-call parity holds for European options, but not for American options.e