Question: S= $100, K = $95, r = 8% (and continuously compounded), = 30%, = 0, T = 1 year, and n= 3. a. Confirm that

S= $100, K = $95, r = 8% (and continuously compounded), = 30%, = 0, T = 1 year, and n= 3.

a. Confirm that the binomial option price for an American call option is $18.283.

b. Demonstrate that the binomial option price for a European put option is $5.979. Verify that put-call parity is satised.

c. Confirm that the price of an American put is $6.678.

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