PLEASE WRITE ON A PAPER SO THAT I CAN UNDERSTAND THE TWO-STEP TREE CLEARLY

a) Consider a European call option on a non-dividend-paying stock where the stock price is $140, the strike price is $140, the risk-free rate is 5% per annum, the volatility is 10% per annum, and the time to maturity is 4 months.

i)Calculate u, d, and p for a two-step tree.

ii)Value the option using a two-step tree. Plot the tree.

b) If the call option above were an American put, how your calculations change?

i)Calculate u, d, and p for a two-step tree.

ii)Value the option using a two-step tree. Plot the tree.

a) Consider a European call option on a non-dividend-paying stock where the stock price is $140, the strike price is $140, the risk-free rate is 5% per annum, the volatility is 10% per annum, and the time to maturity is 4 months. i. Calculate u,d, and p for a two-step tree. ii. Value the option using a two-step tree. Plot the tree. b) If the call option above were an American put, how your calculations change? i. Calculate u,d, and p for a two-step tree. ii. Value the option using a two-step tree. Plot the tree