Question 3. Consider the two-step binomial tece from Question 1. However, now suppose that of the stock is at 120, then the mally compounded interest rate from time I - 1 to T-2 is 5% not 10% a) Write down the value of the money marlut account M. at all states of the tree 1 h) By using the martingale condition for S/M, find the risk-neutral probabilities with respect to the money market mumeraire M. at each node of the tree e) By ising the the martingale condition for 2(1,2)/M, show that 2(0,2)-(@) 63) 1.1 d) Use (e) and an appropriate martingale condition to prove that the risk-neatral peobability, with respect to the mumeraine 29, 2) of the stock having value 120 at T - 1 is 4/6 Hence show that the risk-neutral probabilities of this state, with respect to the money marlust account and the ZCB with maturity T - 2, dific by 2/196. Do you want to revisit your comments in Question 2 (b)? Question 3. Consider the two-step binomial tece from Question 1. However, now suppose that of the stock is at 120, then the mally compounded interest rate from time I - 1 to T-2 is 5% not 10% a) Write down the value of the money marlut account M. at all states of the tree 1 h) By using the martingale condition for S/M, find the risk-neutral probabilities with respect to the money market mumeraire M. at each node of the tree e) By ising the the martingale condition for 2(1,2)/M, show that 2(0,2)-(@) 63) 1.1 d) Use (e) and an appropriate martingale condition to prove that the risk-neatral peobability, with respect to the mumeraine 29, 2) of the stock having value 120 at T - 1 is 4/6 Hence show that the risk-neutral probabilities of this state, with respect to the money marlust account and the ZCB with maturity T - 2, dific by 2/196. Do you want to revisit your comments in Question 2 (b)