Please solve question 1. additional infomation is provided as question#2

1. Consider the Multi-period Binomial Model (the CRR model) with parameter values as in Exercise 2 on page 28 of the text. Under a forward contract, the holder of a long position in the contract will buy 100 shares of stock at time T = 2 for a fixed (total) price $F. What should F be so that neither the holder of the long position in the contract, nor the holder of the short position (the seller) has an arbitrage opportunity? Identify the relevant European contingent claim, and derive F using arbitrage-free pricing. (Reminder: No money changes hands at time t = 0 when the forward contract is written.) 2. Consider a CRR model with T = 2, So = $100, S1 = $200 or Si = $50, and an associated European call option with strike price K = $80 and exercise time T = 2. Assume that the risk free interest rate is p = 0.1. 1. Consider the Multi-period Binomial Model (the CRR model) with parameter values as in Exercise 2 on page 28 of the text. Under a forward contract, the holder of a long position in the contract will buy 100 shares of stock at time T = 2 for a fixed (total) price $F. What should F be so that neither the holder of the long position in the contract, nor the holder of the short position (the seller) has an arbitrage opportunity? Identify the relevant European contingent claim, and derive F using arbitrage-free pricing. (Reminder: No money changes hands at time t = 0 when the forward contract is written.) 2. Consider a CRR model with T = 2, So = $100, S1 = $200 or Si = $50, and an associated European call option with strike price K = $80 and exercise time T = 2. Assume that the risk free interest rate is p = 0.1