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 1.156, and down-factor d 0.844. The probability of the stock price ends at the second to the highest level (after four periods), based on the risk-neutral probability, is closest to O 0.269 O 0.369 O 0.469 O 0.569 QUESTION 4 You observe a $20 price for a non- dividend paying stock. The PUT option has two peri compounded risk-free interest rate is 4%, the exercise price is $18, u = 1.296, and d = 0.714. Assume the option is European-style. Based on a two-period binomial tree model, the current put option value is closest to: $0.396 $1.396 $4.754 $3.754