Question: Problem 2. Consider the Binomial Asset Pricing Model, with u = 2, d = 1/2, r = 1/4 and S0 = 4. Consider an American

Problem 2. Consider the Binomial Asset Pricing Model, with u = 2, d = 1/2, r = 1/4 and S0 = 4. Consider an American Put Option with strike price K = 9, maturing at time N = 3. Using a backward recursion, find the arbitrage-free price of the option at time 0, i.e. V0 under the risk-neutral probability.

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