Problem 2 Consider a stock modeled by a BLM with parameters u= 1.0594 and d= 0.9439. The current price of the stock is $225 and the stock pays no dividends. A certain call and put option have an expiration 3 months from now and the strike price is $200. The current annual rate of interest (risk-free) is 3% compounded monthly. Determine the theoretical value of the call and put using the binomial option approach. Verify that your results satisfy the put-call parity equation. Problem 3 Consider the values of the put and call options using the B-S equation for the same stock as in Problem 2, i.e., S(0) = $225, K = $200, r = 3%, T = 3 months from now and with volatility o = 0.2 and no dividends. Compare with results in Problem 2 and comment