show how to extend the multi-period binomial tree to price an American option that pays dividends and has constant volatility. Please turn in a brief answer to all the questions. Consider International Business Machine Corporation (IBM). The shares of IBM are currently trading at $87. Assume the yearly volatility of IBM is around 40%. Using a three step binomial tree approach prices of options with 6 months to maturity and strike price equal to $92. The annualized risk-free rate is equal to 5%. In two months the stock pays a dividend of $10. Compute the value of: 1. the European put option using the risk-neutral probability method 2. the European put option using the portfolio replication method 3. the American call option using the risk-neutral probability method 4. the American call option using the portfolio replication method