Question 2 Consider a single-period binomial model for the stock price process {St:t= 0,1} traded at time t=0,1. Let S0=100 and let the price rise or fall by 10% in the single period. We assume that the interest rate is r=5%, and the risk-free asset price at time 0 is 1. The contract we wish to price is a European put option with strike 105 and expiry T=1 (a) Find the risk neutral probabilities for the tree. (b) Find the price of the European option at time 0. (c) Find the replication portofolio for the put option. Question 2 Consider a single-period binomial model for the stock price process {St:t= 0,1} traded at time t=0,1. Let S0=100 and let the price rise or fall by 10% in the single period. We assume that the interest rate is r=5%, and the risk-free asset price at time 0 is 1. The contract we wish to price is a European put option with strike 105 and expiry T=1 (a) Find the risk neutral probabilities for the tree. (b) Find the price of the European option at time 0. (c) Find the replication portofolio for the put option