Question: Please type the answer by computer, so i can see it clearly, thank you!! Alibaba Group (9988) is currently trading at $110. The stock is

Please type the answer by computer, so i can see it clearly, thank you!!

Alibaba Group (9988) is currently trading at $110. The stock is anticipated to pay no dividends. It has a 45 percent yearly volatility. With continued compounding, the interest rate is 5% each year. Consider a $100 strike 3-month American put option on Alibaba. To answer the following questions, build a 2-period binomial model.

Questions:

1(a) Calculate the up and down factors. Draw and determine the stock price process at each node.

1(b) Determine the risk-neutral probabilities. Compute the American put price at each node.

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