Question: QUESTION 3 We consider a 4-period binomial tree model for a call option. Suppose the risk-free interest rate is 4%, the up-factor u - 1.125,

QUESTION 3 We consider a 4-period binomial tree model for a call option. Suppose the risk-free interest rate is 4%, the up-factor u - 1.125, and down-factor d =0.812. The probability of the stock price ends at the second to the lowest level (after four periods), based on the risk-neutral probability, is closest to 0.06 0.16 0.26 0.36

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