Question: Question 4 (a) Why will an American call option on a stock that pays no dividend be priced exactly like a European call option on

Question 4 (a) Why will an American call option on a stock that pays no dividend be priced exactly like a European call option on the same stock? (4 Marks) (b) Consider a European put option written on a stock that is now worth so = 100 with maturity T = 2 and striker = 110. Suppose the risk-free rate is r = 1/10 and a (European) call option written on the same underlying, with the same maturity (T = 2), and with the same strike (x = 110) costs co = 30. What is the price of the put option? (6 Marks) (c) Assume a multiplicative binomial process with 0

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