stochastic calc

Consider a stock process S on a tree. S starts at time i = 0 at So = 30 and it can go up or down 15% every year. The interest rate is 5%. 1. Sketch the stock process for two years. 2. Consider a European call option at a strike price of K = 28 and with an expiration date of two years. Find the value of the option at all nodes of the tree. 3. Consider now a European put option at a strike price of K = 28 and with an expiration date of two years. Find the value of the option at all nodes of the tree. Consider a stock process S on a tree. S starts at time i = 0 at So = 30 and it can go up or down 15% every year. The interest rate is 5%. 1. Sketch the stock process for two years. 2. Consider a European call option at a strike price of K = 28 and with an expiration date of two years. Find the value of the option at all nodes of the tree. 3. Consider now a European put option at a strike price of K = 28 and with an expiration date of two years. Find the value of the option at all nodes of the tree