Problem 3 (Required, 25 marks) It is given that the current price of a non-dividend paying asset is $30. Its price movement in the coming year is simulated by 3-period CRR Binomial tree model (1 period = 4 months). It is given that the volatility of the stock is 18%. The annual riskfree interest rate is taken to be 7%. Find the current price of 1-year lookback floating strike call option which the terminal payoff is V3(S3) = max(S3 - m3,0), where m3 = min(S1,S2,S3). Problem 3 (Required, 25 marks) It is given that the current price of a non-dividend paying asset is $30. Its price movement in the coming year is simulated by 3-period CRR Binomial tree model (1 period = 4 months). It is given that the volatility of the stock is 18%. The annual riskfree interest rate is taken to be 7%. Find the current price of 1-year lookback floating strike call option which the terminal payoff is V3(S3) = max(S3 - m3,0), where m3 = min(S1,S2,S3)